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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: valueminded who wrote (58797)	5/7/1999 5:15:00 PM
From: Knighty Tin	Respond to of 132070

Chris, Many who do not trade bonds professionally think that inflation, or lack thereof, is the key to long term yields. Inflation is a factor, but numero uno, and the reason why the current long bond in now yielding 5.81% while off the run Treasuries are yielding over 6%, despite good inflation news, is supply and demand. There is simply too much demand for debt to be handled at lower rates. The market has to raise rates to attract buyers. Consumers and corporations are loaded with debt and both want more, while many potential lenders prefer to play the stock market. There is an interest rate point where the overextended consumer can no longer pay the nut each month and I think we are approaching it. Which is when the suddenly sell nothing corporations can no longer meet their nut each month.