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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (21060)	10/25/1998 10:55:00 AM
From: Ross	Read Replies (1) \| Respond to of 50167

IQ, You mentioned being pleased that the bond yield curve is now moving away from a "inverted" curve to one with a 100 to 200 basis point spread.. On a short term basis everyone seems to be overjoyed with this scenario.. What I find interesting; up until July 31 of this year (long bond at 121) the market was overjoyed with lower yields. At that juncture (from 121, long bond)the equity market sold off until the long bond hit a hi of around 135 on about Oct. 8.. So, there was a obvious divergence and a reversal in sentiment that lower yields were a good environment for the market.. My analysis suggests, in the next week, the long bond may go as low as 125 (plus or minus) (now 127) and then begin to move up to the 132 area.. So, the yield will again begin to move downward. I wonder how the market will accept this.. Longer term I believe the 132 area is strong resistance and the long bond will resume the downward trend (higher yields) This, if true, should overjoy the bulls (widening yield curve). But I find that a strange anomaly.. Because, up until July of this year, lower yields were the driving force behind the bull market. And, If my analysis serves me correctly (on the bond) your suggesting just the opposite. (higher yield/strong equity market...) Ross