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

To: Crimson Ghost who wrote (48117)	12/24/2005 2:22:49 PM
From: UncleBigs	Read Replies (1) \| Respond to of 110194

US treasuries out of favor? Not with foreign CBs -- the major buyers Most foreign CB holding of US Tresury debt is in the 0 to 5 yr.. Long yields no higher now than when the Fed began hiking. Extremely low (to put it mildly) considering the mounting global inflationary pressures. Inflationary pressure ares subsiding, not mounting. The core for worldwide economic activity is US housing. That bubble is deflating as we speak. The only way to keep it levitated would be for the Fed to begin aggressive easing immediately. They are already way behind the curve if they want to keep the housing bubble alive. I would argue that the belief that long rates will remain low as far as the eye can see is perhaps THE key factor supporting all the extant bubbles I don't agree. The key factor for perpetuating and supporting the bubbles is/was the Fed's successful campaign to accelerate time preferences for all purchases with ultra-low short term interest rates. Credit growth ballooned to buy houses, autos, RV's, stocks, gold, etc. Demand is now satiated. Credit growth is the fuel for all of the bubbles and that is dying.