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Politics : Idea Of The Day
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To: Mark Fowler who wrote (27164)6/23/1999 8:00:00 PM
From: IQBAL LATIF  Read Replies (2) of 50167
 
Mark... fwiw.......

I would think that market has built in a quarter point raise, it will be disappointed if this raise does not come through, a half point will lead to a big rally in bonds, may be intially a little test of lower supports like 1282 area but the market will take that raise very positive a proactive Fed ready to pounce on early sign of inflation will be very positive, the globasl impact may be bad, we may see Euro weakening further however the Europeans with the exception of Germans (for DEM strength) like weak Euro is good for export led growth and France is quite happpy about it rather gleeing.. Even ensuing Yen weakness may be good for Japanese. With $ rising and US bonds rallying I would see higher interest rates with cheap imports and strong $ will make a good mix for eventual rally. Don't forget that pre- Oct cuts three in a row came on back of gloom otherwise US economy was quite robust thna too, but to create global liquidity and remove the threat of global meltdown these cuts were more designed to help global finacial system, now that bond yields have moved quite a bit up and global markets have stabilise I don't see any reason that raise in interest rates may hurt global equity prospects either, with exception of China and ASEA that may get worried if Yen weakens too much against $ but cross rates between Yen and ringgit and rupiah may not drastically change as these currencies may also loose viv a vis $

I see that bonds and US assets will be quite nicely bid. Initial impact of big raise may be test of supports but a raise now will lead to cuts in early 2000.. As markets work on future we will see that supports will be tested and marekt will bounce off supports, go long bond on raise is my trade....
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