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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: gregor_us who wrote (20030)	12/31/2004 12:26:53 PM
From: mishedlo	Read Replies (2) \| Respond to of 116555

and what may happen to Treasuries, is my view that in a housing-led/stock-market-led economic downturn there will simply be not enough capital, in the aggregate, to support current asset prices--including Treasuries. I don't understand why, therefore, some special exemption is made for Treasuries from the same viewpoint that holds asset values will be deflating all over the place. Accordingly, I see falling Treasury prices in a deflationary bust in the USA, because Treasury supply is gargantuan and already there is not enough capital, domestically, to support the Treasury Market. If there was, we wouldn't be sucking up 80% of the worlds capital already. Regards, LP I am not sure if you are talking about yields or prices, but there is a ton of US money that will be rushing out of stocks and junk and agencies into treasuries if housing collapses. It is preposterous to think that long term rates will rise in that scenario IMO. The pent up demand for treasuries in the US is staggering IMO. Now, if you think rates have to rise to prick the housing/debt bubble FIRST, that is a different argument. I do not buy it but Russ would. Mish