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

To: Incitatus who wrote (67835)8/20/2007 5:15:25 PM
From: ballsschweaty  Respond to of 116555
 
There is selling of traditional money market funds which invest in securities other than U.S. Treasuries and buying into t-bills directly or through a treasury only money market fund.

I'm sure that has an effect on short term t-bills. I don't think treasury only money market funds necessarily have to buy short term t-bills. I think they can use the repo market to get much closer to fed funds yields.

It's possible that the bond market is boarding the life rafts while the stock market is ordering more drinks at the bar. I like to watch relationships across all markets. I tend to think the ultra low t-bill rates will reverse and we'll see extreme fear turn to greed.

The greed trade is already showing up in China, fslr, crox, rimm, bidu...the typical hot money beta plays.



To: Incitatus who wrote (67835)8/20/2007 6:06:49 PM
From: benwood  Respond to of 116555
 
MMF can and do hold non-Treasury debt, and lots of it. So selling non-Treasury and buying Treasury will drive down the rate, and I think that's partly what's happening. And yes, it will be transitory. Inflation is gathering steam and the incredibly low yields will only pacify jittery investors for a few weeks and then they'll peak out from their bunkers and see the -4 to -5% gap between their T-bills and inflation and start whining.


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