[Soultrader]

	Quote:	alleyb
	the difference between now and Feb is that the de-leveraging shows that clearly the funds whoever the funds may be whether Banks or Hedge Funds were clearly liquid then and could afford to buy and became more than 100% invested so that this time they were forced to sell. Sell meant sell anything liquid for they be stuck in the illiquid stuff whether that is so called toxic waste sub-prime or other. The Bond market recovery is a function partly of the flight to quality but also the necessity of covering. Toxic waste is priced against Treasuries and the spread will widen further which right now will create a potential for buyers to arrive for the sub-prime purely because Treasuries are rallying. However what the new buyers may not realise is that the rally in Treasuries is also being driven by an unwind of the swaps set-up vs the sub-prime whereby the swappers are all short Treasuries and long sub-prime. IE double whammy time. There is also the need to re-allocate assets and frankly in terms of a Quarterly Auction Market Profile is displaying all the classic signs of buying and no selling. De facto bond yields will go down and will in the short term create that false dawn for stocks but again the de-leveraging that is on-going will utilise the opportunity to get out of jail from elsewhere. Found this article to be interesting for it shows the degree to which the current talk from the commercials about utilising the discount window as being some form of support for the FED's discount rate cut as being totally obfuscation. I haven't figured yet how to post links so I have edited this post to add the link long hand. http://money.cnn.com/2007/08/24/maga...ion=2007082415 as for the chart I wish to post on bonds sorry but also I haven't figured how to upload charts yet either. sorry

Hi alleyb,

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