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

To: BSGrinder who wrote (24943)	3/4/2005 2:03:09 PM
From: CalculatedRisk	Respond to of 116555

Thanks. I was wondering about that possibility ... otherwise the action seems backwards. Thanks again.

To: BSGrinder who wrote (24943)	3/4/2005 2:09:31 PM
From: J_Locke	Respond to of 116555

A bond sell-off implies asset class rebalancing. If you sell bonds, what are you going to buy? Stocks at 20X earnings? Short term paper at 2.5%? The fed funds rate is still too low to force hedge fund/financial institution de-leveraging. When fed funds gets to 3.5% or thereabouts, the carry trade will finally start to unwind and bonds and stocks will both sell off to a degree. If you look at the experience of the 1960's, fed funds bottomed at 1.17% in 7/61, but the 10y stayed around 4% until 1965(!), when fed funds finally hit 4%. Interest rate history: federalreserve.gov