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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: flickerful who wrote (25102)	8/24/1998 10:48:00 PM
From: N	Respond to of 94695

randy, Long term rates are thought to be higher than short term rates -- many possible conjectures: - there is a premium required for holding a long term instrument - there is anticipation of higher future inflation The nominal interest rate is approximately the sum of the real rate (the rate of growth in gnp for example) plus inflation: i = r + pi So that, for a given future expected level of inflation, when long term nominal rates are lower than short term rates (inverted yield curve), one might expect a lower real rate of the return in the future, ie a lower growth rate of gnp or recession. One could also say, given r, people are expecting lower future inflation. Though can't imagine why given relentless rate of money creation. Maybe this is what's making this market, among other things, so schitzy. For what its worth... who knows Nancy