>Yow! Just a few days ago we were at 5.9!
>
>This reminds me of last year when the Fed's interest
>rate hike drove the long rate down.
When was that? They raised the fed funds target in the spring of 1997, but 1998's moves were all towards ease.
>Needless to say it all contradicts the typical
>classroom interest rate model where you lower rates by
>lowering the discount rate and raise 'em by raising it.
One policy move may have odd effects, but whenever the Fed tightens or loosens on a streak, bonds pretty much follow. People in the markets said that the 1994 tightening would be bullish, and they lost their shirts.
Doug