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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (24608)	1/13/2005 6:56:06 PM
From: gregor_us	Read Replies (4) \| Respond to of 110194

Nope, I Don't Fail to Understand the Argument. Truly. I really do understand the argument. The problem is that the argument proceeds from a flawed analysis of the current state of the US treasury bond market. The analysis of that market is conducted in such a way to perfect and accept the foreign holdings of US treasuries as being permanantly removed from the supply. Since the US treasury Market currently trades, in fact, as though foreign holdings were permanently removed from supply, one can hardly blame people for such analysis. But that doesn't make the analysis satisfying. While I have granted that Japan's holding probably is indeed permanently removed from supply--I used the word "imprisoned"--Japan's position does not support the flawed analysis. The holdings of myriad other central banks, foreign funds, etc are not imprisoned. My point is as follows: Heinz thinks he is describing a bond market that is classically set up for further gains, based on sentiment. However, what he is unwittingly describing is a bond market that is seriously distorted. The negative sentiment towards the bond market is rational--however, the sentiment has been produced by the distortion, so as Heinz correctly points out, that sentiment is doomed to be ever frustrated (for now). But he never grants the distortion. That's the blind spot. What is comical is that you fail to understand the argument. My arguments have been quite different, actually, and I think your post really takes on the collective negative sentiment towards the treasury market. My position is different. I am not a classic Bond Bear right here, and have posted about that several times. My two major points however are what I stated above as Heinz's complacent argument, and, the fact that Americans have zero savings in the aggregate to support the US treasury market in the future during a housing and stock market crash. It won't matter if Bob and Judy in Salt Lake get out of the stock market in time and can afford to move money into treasuries. Steve and Lisa in Atlanta will have to use proceeds from Treasury Bond Sales and Stock sales just to surive their lost income in the downturn. (Forgive the fallacy of composition here but my point about the aggregate savings of Americans is valid.) Again, we get to Heinz's other blind spot--and your's I guess, because you have asserted this as well--which is the the notion there will be domestic capital to support the US treasury bond market in a down turn. There is simply no evidence for it. (Though I have posted several times that I think we see a strong treasury market intially at the Recession's outset.) But my point is about after that first reaction. I just find Heinz' notion astonishing, that the ten year JGB bull market, as an example, should be no different for us. Do Americans in the aggregate have savings, like the Japanese did (and still do)? If the Americans do, please correct me. BTW, your post was awfully shrill and using the letter "F" does not change the impact of the word. Is your tone really justified? I think not. Best, LP

To: mishedlo who wrote (24608)	1/13/2005 6:57:28 PM
From: yard_man	Read Replies (1) \| Respond to of 110194

I'm looking for TNX in the low 3's by the fall -- 30 year yields get a 3 handle at some pt in the future. No one believes a depression can happen here ...

To: mishedlo who wrote (24608)	1/14/2005 6:21:45 AM
From: Square_Dealings	Read Replies (2) \| Respond to of 110194

I think bonds are completing 3 peaks and a domed house pattern sandspring.com this pattern can be found throughout the stock market and I think stocks are further along in the pattern. So yes bonds will probably go up for maybe a few more months, roll over slowly, and then crash. Maybe it doesnt happen until 2006 who knows. But there is definitely a limited life to the strength in bonds imo. M

To: mishedlo who wrote (24608)	1/14/2005 9:19:39 AM
From: russwinter	Respond to of 110194

<What IF Japan sells, What IF China sell> Although there is historical precedent (it could happen) for a big player to decide to take a chair first in if they felt the music was stopping, I don't think that's what I (or Lambeth) have especially been arguing. What I'm arguing though is that the $6 billion a week appetite for US Old Maid Cards may erode (that to me appears to be what was happening in the pre-Dec 8th period), and even if that happens marginally, you will have removed the major prop (literally) to the US bond market. Here's another smaller player example of this, but starts to add up, and puts heavier lifting on the last man standing (Japan):: siliconinvestor.com Right now I think the custodials are trying to put the US on a leash as a quid pro quo to playing musical chairs awhile longer. It may end up being a beta test situation however.