FED will continue to drop interest rates

Rates fall, bonds' value rises. Generally speaking. Anything else would be an anomaly.

JOE

Hmmm. Generally, if interest rates go down, the price of bonds goes up. Why do you think bonds will go down?

Dave

I'm still waiting for the "very significant correction". We could still get there...

-Will

What bonds are you talking about? Joe is right, and as the WSJ is so quick to point out, bond prices move inversely to interest rates.

The "market rate" for short term bonds was 3.09% yeasterday. The huge disconnect between the Fed and the market can mean many things- almost none of them good.

Since you bring up the WSJ, here's what they had to say yesterday (Monday):

"[Headline] Longer-Dated Treasury Issues May Bear Brunt of a Rate Cut ...

"Friday['s rate] cut ... was enough to prompt a significant drop in the prices of long-dated Treasuries. ...

"[L]ong-dated Treasuries [] would suffer most from a hasty cut, which could hit the 10-and 30-year issues with the full force of inflation concerns. ... Should investors decide that the Fed has taken its eye off inflation, they will demand far higher premiums for holding long-term interest-rate risk."

Mark Freeland snipped-for-privacy@sbcglobal.net

It's official, you're 0-2. What's your next prediction?

-Will