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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: energyplay who wrote (151)	8/30/2005 10:42:00 PM
From: Moominoid	Respond to of 219855

I have been told that the Fed is contracting the money supply, selling bonds to soak up excess USD. Yes, that's how they control the Federal Funds rate. I've been predicting for a while that the USD will rise long as the Fed keeps raising rates and on the basis of the charts that the longer term interest rates will continue to fall and gold would fall short term. So I'm not surprised by the movements. The sharp sudden drop in gold this morning was interesting though. By the way, the yield curve inverted, with the 10 year under 4.09 % I think 5 year is slightly higher. Interesting. It's certainly getting flat. I wouldn't call it an inversion until the 90 day rate was above the longer term rates. But from the Fed's minutes they will get there. They said that if rising oil prices push up inflation they will need to raise rates more (well I think that's what they said though it sounds about as idiotic as the IMF did in Indonesia in 1997-8 hmmm). That will guarantee a recession I think... This might be to slow/stop the housing bubble, or absorb all the re-patriated money US corporations are getting from overseas. Yes they want to crush the housing bubble. They are signalling that. I'm not sure that the repatriation thing is really going to have a big impact. I don't know enough detail to assess that. I've speculated before that a lot of the money that might get repatriated probably already in USD and sitting in foreign banks or other financial assets. Maybe even in US bonds but through foreign accounts. So not sure that "repatriation" due to the tax amnesty involves buying dollars. But maybe there's something I'm missing there.