Reply #62: Bonds rise; Hedge fund rumor circulates

[AnneD]

NEW YORK — Treasury prices threw off early weakness and advanced Friday after a rumor that another hedge fund is in financial trouble circulated through trading rooms.

"There are a number of names of hedge funds being bandied about as possibly being in trouble," said Tom di Galoma, head of Treasurys trading at Jefferies & Co. It is impossible to discern whether the stories have any basis in fact, he said.

Problems at hedge funds in recent months have contributed to the massive declines on Wall Street, and in turn benefited the government bond market. Problems at two funds operated by Bear, Stearns & Co. last fall brought home to the markets the reality that the housing and mortgage crisis was spreading throughout the financial sector.

Although the rumor was not verified, it affected the markets, sending the major stock indexes well below their best levels and pushing Treasurys higher. Worries about weakness at financial institutions tend to spark demand for Treasurys, which carry government backing and are largely shielded from the risks of some other asset classes.

http://www.chron.com/disp/story.mpl/ap/business/5485694...

Wonder if one of those names is Goldman Sachs????? The music is winding down and athe players are eyeing the chairs.