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

To: Rarebird who wrote (55133)	3/3/2006 12:55:34 PM
From: Crimson Ghost	Read Replies (1) \| Respond to of 110194

I still expect a major reversal soon (especially with bond yields moving to new highs) but market action still is quite bullish as shown by the repeated rebounds from morning selloffs.

To: Rarebird who wrote (55133)	3/4/2006 10:19:37 AM
From: russwinter	Read Replies (1) \| Respond to of 110194

If the bond market perceives the Fed as being soft on inflation, that would precipitate a major league sell off in the bond market.> I agree with this, but the sell off could also caused by weaker economic conditions, that imperil (or more accurately, reveal) overall credit quality in an ultra fragile economic system. Would further add it will cause a sell off in the USD against "low interest rate" currencies, especially as rate differentials narrow. That in turn will unwind leveraged, aggressive carry trades. The issue I'm most focused on are credit spreads and credit derivatives. Non-existent sprerads such as that seen on emerging market debt, morganstanley.com T-Bills versus bank commercial paper, bank CDs-T-Bills, BAA- Treasuries, agencies-Treasuries, just aren't sustainable, and are artificially contrived due to excessive and careless use of credit insurance (a Ponzi scheme). Message 22225457 Heaven help the system if a major claim is made against that insurance, because I don't think many of the counterparties will be around to cover it.