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

To: orkrious who wrote (79417)	2/28/2007 12:09:46 AM
From: pogohere	Respond to of 110194

Thanks for posting that. I note this: As we get close to the Fed actually easing, we should see this inversion once again return to a positive spread and then see the yield curve steepen even more, as the Fed cuts the short end but the long end either fails to rally or at some point even sells off along with the dollar. If I recall correctly, Trotsky among others has pointed out that gold loves a steepening yield curve. In particular I recall T writing that gold equities especially prosper when the steepening comes as a result of the short term rates declining. The rationale being that this presages a decline in mining costs and an incline in earnings. It makes sense. We just may get a test of this soon.

To: orkrious who wrote (79417)	2/28/2007 7:49:03 AM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 110194

In other words, the corporate junk market remains asleep. the spread spike chart i posted yesterday suggests the market is not asleep. WSJ's take: Among the bonds that were hardest hit were those issued by General Motors Corp. and Ford Motor Co., which would be especially vulnerable to an economic slowdown or an increased unwillingness of creditors to lend. Prices on some bonds issued by Wall Street investment banks like Merrill Lynch & Co. and Bear Stearns Cos. also took hits; they could suffer if the markets keep sinking. Prices on some bonds issued by Countrywide Financial and Residential Capital, mortgage lenders, also tumbled.