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A Man of Wealth and Taste
Join Date: Dec 2002
Location: Out there somewhere beyond the doors of perception
Posts: 51,063
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Under the Wayne scenario Interest Rate will start to climb as the Bid To Cover Ratio starts to decline in the Treasury Auctions...this would force interest rates slightly higher to intice investors to buy Treasurys..rates would start to climb slightly at first and then dramatically as fear starts to set in.
The CURRENT policy by the Fed is to be a PURCHASER of last resort of Treasurys at Auction to keep the Bid to Cover ratio high and interest rates low. For the Wayne scenario to play out the capacity of the Federal Reserve to purchase Treasuryes will have to be exhausted. That ain't quite the situation at the moment.
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"Some Observer"
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