AJ, Challo or any bond expert ....
I've been trying to understand what he says on that link and I get the gist of it, but tend to be skeptical of anyone who seems to have too clear a picture of anything that can't fit in a 1ft x 1ft frame. :)
While I know a few things (stuff like skinning chipmunks, lolling about with possum and suchlike :) ), I simply don't have a handle on the bond market and how interest rates are tied to everything.
Does anyone know of a short-cut approach to understanding the intricacies here? I need either a very crisp book that doesn't have a lot of fluff, or a really good link or two. That can't be easy to get, can it?
For example, Challo's link suggests that the only solution to the problem is for the stock market to dump so horribly that
panicky bond buyers will drive down the yield. As a signal the guy mentions the 10-yr breaking up through the 4.2% yield level now.
**What puzzles me is precisely this: if his scenario is SO clear, why the heck are they selling the bonds and pushing the rates up now?**
There is a big disconnect somewhere, and perhaps if I could learn more about the role of interest rates in bank exposure I could at least get a reasonable picture.
Perhaps I am asking a question that many people would like to ask.
AI
