I will let the glorious chart speak for itself.

This is like a poker game where river card is shown and you have three 2's and opponent failed to draw the flush.

Today's high bond price is what Greenspan calls conundrum. Not only is 10 year bond yielding at seriously strangely low of 4.1%, yield curve is close to turning inverted (ie. yield spread between long and short end going negative).

This could be

1. Stockmarket is about to tank as money seeks safety (it's not)

2. Inflation is in control as people feel safe locking money at 4% for 10 years away. (it's not)

Neither scenario makes sense. 10 and 30 year are benchmarks for housing market. The foreign bankers reducing treasury holding, the only conclusion I come up is long rates are low because they have to be.

*picture courtesy of CNN.

While we are at it, why not end with my last issue's comment regarding WSJ turning into USA today.

This is front page headline on WSJ this Tuesday

Getting into daycare is becoming harder for today's dogs.

Featuring picture of Cousteau, a great Dane, and Chablis, I think he is a poodle.

Save your money for Financial Times instead and have a great memorial weekend!

John Lee
john@losb.net
www.maucapital.com

31 May 2005