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Long bond yield, comments???

Started by pkamm, 06/01/2005 09:35PM
Posted 06/01/2005 09:35PM | Edited 06/01/2005 09:36PM Opening Post
Notice the yield on the long bond is going DOWWWWWNNN...

While the Fed continues to push the short rates up, up, UP...

While oil and other commodities are rallying again...

This combination of conditions seems terribly unnatural to me and I am at odds to explain it. The commodities market sees inflation, but the bond market isn't buying the story. Maybe the bond market thinks the commodity prices are going to choke the global economy, or that fed policy will eventually choke the commodity rally?? I dunno. But one of these indicators has got to give in to the other at some point. Greenspan's "conundrum" speech doesn't even do the situation justice. It's just plain weird.
Posted 06/05/2005 07:29PM #1
Maybe Fannie Mae is buying them up, along with all of the nation's mortgages.

Isn't the commodities "inflation" simply a reflection of the depreciated US$ against the Euro? Of course, the US$ is low because the Fed prints all the money that anyone asks for, including Fannie Mae.
Posted 06/05/2005 09:03PM #2
Wellll, me thinks because oil makes up less than 8% of our ecomony now as compared to 24% in the 70s, the hhigher oil prices only really fill the Opec pockets. And I have seen where international interest rates are lower than ours. Couple this with the ability to hedge just about anything and you can make a case for low rates for a while. I doubt Greenspook will start to raise rates to fend off a housing bubble, I think the only policy mistake that man has ever made was to raise rates to cool off the markets during the dot bomb market. He could have easily cooled by raising margin requirements.