This article is brought to you by:
CONSENSUS
THE YAMAMOTO FORECAST
P.O. Box 573, Kahului, Hawaii
808-877-2600(March 13, 2002) FINANCIAL INSTRUMENTS: U.S. TREASURY BONS--I expect a final encore from the bond market. The key word being, final. Although bonds will try to extend this last curtain call, it won't be possible. What I am implying is that the bull run for the debt market has almost run its course.
As you all know, I have been a bond bull for a long time. Not anymore. The game's over, except for the farewell tour. It is goodbye time. Don't confuse the exit for another bullish cycle. A short-term rally may seem like a long-term advance, but the end results are different.
The debt market has lost its biggest rally. Bonds have been deserted by the Federal Reserve chief. Sure, Fed Chairman Alan Greenspan could provide another small interest rate cut for insurance. Or he might attempt to "talk" rates down instead of actually reducing the number. But for all intents and purposes, the lowering of interest rates is over.
Mr. Greenspan may be done with his easy monetary policy. At the same time, he won't be increasing interest rates either. Still, the omission of the act of dropping rates after multiple reductions holds a significant message for investors. Bonds are alone, by themselves. There's no support now. That doesn't necessarily paint a scary picture for the market, but at best, it's a precarious environment for bonds.
SHORT-TERM INDICATORS--Bullish.
Irwin T. Yamamoto
Hosted by:
CONSENSUS, INC. AND INVESTORS
CO-OP
P.O. Box 520526
Independence, MO 64052-0526
816-373-3700
Fax: 816-373-3701
editor@consensus-inc.com