“You could gamble on an adverse reaction in Treasuries on Dec. 16,” Parenteau chimes in for a second time this Monday, “if the Fed gets more explicit about end of fed funds rate cuts/onto official quantitative easing mode. But my own sense is the economic data are going to print so horrendous into the first quarter of 2009 that equities sell down again.
“This is getting deadly serious, I’ve never seen anything like it, and it’s global. Default-free Treasuries will still get snapped up at ridiculously low yields. And if the Fed does cut 50 points, a lot of money is likely to migrate out of money market funds into some part of the Treasury curve.”
In other words, the bubble in Treasuries likely has room to grow.