Replies to post #5641 on FinancialAdvisor's College Class (FACC)

[FinancialAdvisor]

*frenchee, why do your government retirement savings only count on 4 trading baskets (symbols)? And I got to be up front with you here, long-term I think they all go down the dumper!!!

[AnderL]

frenchee, Bond price and yield speculations

Been watching the treasury ETFs myself. Prices on bonds should keep falling. There is no true demand for bonds yet as people still believe that the equity markets, commodities and real estate are still a good investments. Too many people are bearish the US Dollar and bullish equities and commodities. IMO yields should keep moving up on 5 year notes to at least 5.50 by 10/05 and 06/06. Inversely SHY should keep dropping to about 79.50 before it finally reverses. SHY and $FVX seems to concur inversely. Although $FVX is the 5 year note yield it is the closest to the SHY short term bonds to gauge against.

The 10year yield and price seem to have the most stability, due to people using it as a pivot to hedge against bull and bear markets, but I think that price could erode to 77.60 to 79.00 as the Fed pressures Interest Rates up.

The 30 yield and the TLT will provide the most stability in price and rate of return over the next year. The lowest price could is around 77.00 - 79.00. The 30 year yield has been very resistant to the Fed Rate hikes and has not moved up as much in comparison to shorter bonds. Even after the US cancelled the 30year bonds and older bonds expire. Supply is dwindling which should melt price up and a faster rate but it is countered with dwindling demand for long term commitment. That is concerning because shorter term bonds are in line to surpass yields on the 30 year. If they do we get our inverse yield curve and we should see rates on all bonds start to crash and prices respectively will move up significantly. The bond pits will be rampant with volatility I'm projecting that we will see the volatility start to pick up by the end of 2005 and going into 2006. Equities and commodities should suffer the effects of it and we cannot afford another soft landing without creating hyperinflation. The Fed will more than likely keep raising rates at an exponential rate to pull try to keep Interest Rates up. This will have a stimulating effect on the US Dollar and create a bubble in the senior currency. In effect we will get a global deflation to set everything right again.