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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures -- Ignore unavailable to you. Want to Upgrade?

To: Jerry Olson who wrote (6010)	10/9/1998 11:18:00 AM
From: B.REVERE	Read Replies (1) \| Respond to of 44573

Jerry, you've misread the post. Long rates on bonds are rising (from 4.7 to 5.17) in less than a week. They're rising because hedge funds with exposure to a strong yen are getting killed by the dollar's weakness. The expectation of another cut is causing the dollar to fall further. If the fed actually dropped rates again, hedge funds would be forced to liquidate more bonds to cover their losses on the yen. While this is all happening, those investors seeking safe haven from the coming recession here are looking to park their money in bonds >5% which they consider a good yield considering rates are predicted to drop another 100-150 basis points within a year. These guys are selling equities to buy these above 5% bonds. These guys are the ones with the multi-billion portfilios. Good trading, BR

To: Jerry Olson who wrote (6010)	10/9/1998 11:21:00 AM
From: Tom Trader	Read Replies (3) \| Respond to of 44573

Hi OJ re >>if a rate increase would occur NOW, this market would implode... If by implode you mean head much higher, I wonder........ Given the Greenspan MO, I would think that any spurt would be momentary, because it would be so unusual for a rate cut to follow 10 days after the previous one, that the market may well interpret it as a sign that the Fed is really apprehensive that things are coming apart. A cut in November seems a given -- and it could be 1/2 point -- though with the dollar as weak as it is it may be only 1/4 point. The problem that I am having is that the magnitude of the moves that we are seeing in the bonds and currencies are so incredible that I feel that it has to do with the unwinding of hedge fund positions and other external factors. Under normal circumstances, a decline such as we have seen in the bonds would represent a major trend reversal.