What does the bond rally mean?

Discussion in 'Economics' started by chewbacca, Aug 18, 2006.

  1. Flight to safety?
    Expectation of lower interest rates?
    Cashing out of stock market before collapse and locking in yeilds?

    I have no clue.
  2. increased demand or fall in supply
  3. Sorry I should have titled the thread "What does the bond rally signal." There is no meaning in the markets.
  4. What does the Bond rally signal?

    In this instance, the rally is linked to the belief [in the Bond market] that the Fed has decided to pause, and not raise rates further.

    This is due to;
    *Falling or stable PPI
    *Falling or stable CPI

    Thus they have inferred that inflationary pressures have stabilised currently.

    Due to the fluctuating inversion between short & longer term rates, there is concern that there may well be a recession, due in part to the history of the Fed "overshooting" on rate rises.
    Thus, there may well be a return to "falling rates" if in point of fact a recession is triggered.

    Whether this is actually the case, is quite another matter, and subject to wide differences of opinion.

    jog on