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Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: Chip McVickar who wrote (1459)	4/5/1999 12:06:00 PM
From: Henry Volquardsen	Read Replies (1) \| Respond to of 3536

Chip So my supposition that European/Japanese Banks (including Central Banks), sold treasuries at 5% and created the rise of US 30 yrs bonds from 4.69% in Oct 98 into recent highs near 6% is technically Wrong.... There was no massive selling of 30yr bonds.... That is a little different that what you said in the first post. European and Japanese banks did sell treasuries at 5%, as did many US holders. There was a lot of selling as the market came to terms with the increasing liklihood that there would be not further Fed rate cuts. I was responding to your comment that European and Japanese central banks had been sellers. There is no evidence that there was large scale central bank selling of treasuries. I'm not in the office today but will check when I return but my suspicion is that net holdings of foreign central banks increased slightly. There is a big difference between European/Japanese Banks (including Central Banks) and European and Japanese central Banks. The implications of such an action by the two are very different. My comment about supply/demand was opposite. I was trying to point out that there was a big increase in supply in the first quarter and that there will be net reduction in supply in the next few quarters. I wasn't positing this as the sole determinant of interest rates but as a contributing factor. And technically interest rates do in fact move only due to supply and demand. Of course supply and demand are significantly impacted by speculative moves. Henry