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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 685.66+0.2%Dec 5 4:00 PM EST
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To: donald sew who wrote (5248)2/2/1999 9:08:00 PM
From: John Pitera   of 99985
 
Donald, The Bond market is indeed in a triangle and could break down
in price and higher in yield. With the Japanese rates rising significantly there is greater competition for Japanese institutions
to repatriate capital to Japan and invest in their now higher yielding
JGB's. This coupled with the very strong economic numbers here in the
US mean that the Fed will not be lowering rates near term.

This was not factored into the yield curve particularly the short end
of the curve. I also see the headline of an article in TS.Com that
another rate cut is not a certainty in Europe. The market was expecting that as well several weeks ago. That would have enabled
the Fed to lower rates without affecting the interest-rate differentials between Europe and the US.

The Ozzie buck is influenced by commodity prices....Gold is one of the
biggest influences on the AUD. I would not look for another leg down
in the AUD without a concomitant move down in Gold. My best guess is
that Gold could rally in the next several weeks and go back to the 310-316 range.

Hence the AUD should stay above .6150 for the next couple of months.

All these comments and outlook can be negated by a large macroeconomic
development that is currently not widely seen or given as likely.

Best Regards,

John
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