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

To: Giordano Bruno who wrote (88058)	10/28/2007 1:41:08 PM
From: TimbaBear	Read Replies (1) \| Respond to of 110194

Just curious, how does a person or entity rig the bond market? One idea comes to mind, but i'm sure there are many others: 1). Bond prices are set at the margins just like most prices. Thus it takes a smaller amount to move the market than the size of the market itself. 2). Suppose Bernanke wanted low interest rates in the US to keep the housing meltdown from really exploding. If he had the Fed and possibly Treasury as well (through a cooperative effort) buy Treasuries in sufficient quantities to keep prices firm to higher, then that would influence the rates of all other bonds (Treasury and corporate) in the market. 3). Suppose there were other foreign governments who also felt that this might be a prudent strategy for their own interests? One can see that this approach might work for quite some time......until it didn't (like when the public finally caught on).