Prices are down a point and a half in the long-bond futures contract from the highs of last week.
In the days and weeks to come, the forces of inflation will battle those of higher short-term interest rates and in the end, Asset/Liability Mangers will have a clearer sense of direction for interest rates.
CURRENT MARKET SITUATION
As the chart above shows, bond prices have run up to the lows of last March, where this bear market began, and have fallen back.
TACTICS
Money Market arbitrage is the best policy for the next year or so.
Contact Paterson for more information.
STRATEGY
Continue to shrink the A/L portfolio, reducing long-term assets and liabilities, and adding to Fed Funds.
