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Originally posted by cpdaman
those that watch bond prices may have noted the 2yr has risen in the last month or so to almost 3% trying to force the FED's hand in raising rates.
Raising rates (outside of a .25% bone) is not going to happen in any significant way because of the pain it would likely bring to the highly LEVERAGED financial sector. so instead the only way i know to bring down rates would be a FLIGHT to perceived safety into bonds. How does the gov't /fed orchestrate a flight to safety -well stocks have got to go south.
maybe the fed simply stops buying futures in the DJIA, which they (PPT) were rumoured to be doing when the markets were panicking in march, or perhaps reuters plays up recession talk, or simply they pressure banks to report more of the losses that have gone unreported
so even if we don't see a crash , i see stocks falling because the fed/govt does not like where the bond market is right now, and they need bond prices to rise (yields to fall on the two year toward 2%) and if the stock /bond market is a see-saw then when bonds go up, stocks.....
[edit on 19-6-2008 by cpdaman]