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This is very similar to the explosive bond rally at the end of 1985. There
were a lot of treasury shorts versus mortgage backed securities and
corporate/junk bonds. The credit spreads moved out and the shorts got
squeezed. Same as now.
Jim
-----Original Message-----
From: Stewart Taylor <staylor@xxxxxxx>
To: Timothy Morge <tmorge@xxxxxxxxxxxxxxx>; David (by way of David
<mking@xxxxxxxx>) <mking@xxxxxxxx>
Cc: omega-list@xxxxxxxxxx <omega-list@xxxxxxxxxx>
Date: Tuesday, October 06, 1998 10:08 AM
Subject: Re: Sort of off topic(LCTM)
>Tim:
>
>Look at the spreads, Treasury to MBS, Treasury to Muni's, Treasury to
>Commercial Paper and Junk....... Lots of trouble with domestic accounts
>that have hedged exposure with Treasury Bond shorts.
>
>When we talked last week about bonds beginning to take on a life of their
>own (outside what was going on in the shares)... Im sure that much of that
>bid was provided by accounts who needed to end the pain in these spreads.
>
>Anyway.... Hope all is well.
>
>Stewart
>Stewart Taylor
>Taylor Fixed Income Outlook
>Voice: 501-219-9774
>Fax: 501-228-0963
>E-Mail: staylor@xxxxxxx
>Web Site: http://www.cei.net/~staylor/
>
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