Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (5825)	8/24/1998 12:23:00 PM
From: Bill Ounce	Respond to of 9980

re: deflation (from USA Today) This is all "old news" for the people on this thread. But now such articles are making it into publications like USA Today. usatoday.com World crises give Wall Street Pause [...] The selloff began in Asia as a rally in Japan's stock market failed. Killing the rally: Okura & Co., a Tokyo-based trading company with strong links to Fuji Bank, said it was seeking protection from creditors in Japan's third-largest bankruptcy this year. The selloff continued in Germany as investors feared German banks would suffer losses from Russian loans. At the same time, Venezuela's currency came under selling pressure as investors figured that country, hurt by falling crude oil prices, would follow Russia in devaluing the ruble. [...] So the U.S. Treasury market staged one of its largest rallies in history. Investors bid up the prices of Treasuries, which drives down yields. The yield on 30-year T-bonds plunged as low as 5.39%, lowest since the bonds were issued regularly in 1977. It finished at 5.43%. [...] Deflation at the door? [...] "Confidence in a lack of inflation is at an all-time high," says Jim Bianco of Bianco Research. Low inflation, of course, is good news. But others say the low 30-year T-bond rate could be ominous. "To me, it's a strong signal of substantial disinflation - or deflation," says Bill Gross, bond-fund manager for PIMCO. Deflation is a period of falling prices, such as Japan has suffered. "It's a signal that the deflationary wolf is at our border. It's time for the Fed to lower short-term interest rates." That would stimulate the U.S. economy and slow the flood of capital from the rest of the world. [...]