2008-02-07bloomberg.com

``The auction went as poorly as one could imagine,'' said Andrew Brenner, co-head of structured products in New York at MF Global Ltd., the world's largest broker of exchange-traded futures and options contracts. ``There isn't a lot of demand for bonds at these levels.''

Why would you want to lock your money into the US dollar long term, at yields below the government's own inflation numbers? The only reason people are still buying short term bonds is because the collapse of the structured finance markets has left them no where else to park their funds.

Incidentally, the steepening of the yield curve is bad for mortgages. Anything you're hearing about "historically low rates" ignores the fact that very few people actually qualify at those rates. Even if you're well into prime territory, you are likely to find yourself facing a steep "declining markets" premium on jumbo financing.



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