Re: T-bond holding period

[Doug Henwood <dhenwood@xxxxxxxxx>]

William F. Hummel wrote:

>No.  It is the long term investors who determine the long term
>premium, about which the price will fluctuate in the short run
>due to the activity of the traders.  Otherwise there would be no
>basis for the term structure.

How can that be? The long-term holders of the sort you're talking about,
like life insurance companies and pension funds, will buy probably
Treasuries no matter what the interest rate. As they say on Wall Street,
these are the people who are paid to buy bonds. They may move up & down the
curve a bit, but they're not going to move to another asset category. is
Met Life going to dump its bond portfolio if it doesn't like the angle of
Alan Greenspan's eyebrow during Humphrey-Hawkins testimony?


Doug

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Doug Henwood
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