Zeev's Turnips Patch-No Politics (ZEEV)

[mlsoft]

"But if we are not in a real recovery, how can you explain the rise in log-term treasury rates?"
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duper...

Several reasons -- some of it is fear of inflation due to the massive increases in M-3, courtesy of AG and some is fear of the deficit. Both of these work longer term strongly against the $USD and that in turn causes foreign money to look elsewhere. The fact that AG pulled the rug out from under the carry trade is another large factor and those folks have not likely been able to fully exit their positions, which have definitely caused some real damage for some folks -- I suspect we will be hearing more about that as we go along, and chances are good that derivative problems are lurking out there also. A derivative blowup is probably what took down the mortgage company last week. Finally, the mortgage industry is having to unwind their portfolio to reflect the much slower pace of new mortgages coming into the market, and that probably has a ways to go also.

I do not think that much of the rise in bond rates has to do with expectations of a much stronger economy, and about zero of it has to do with demand for capital, other than from the government where the demand is incredibly large with no end in sight.

mlsoft