MDA - Market Direction Analysis Message Board

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Strategies & Market Trends : MDA - Market Direction Analysis

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To: Les H who wrote (23910)	8/26/1999 2:35:00 PM
From: Les H	Read Replies (1) of 99985

SLOWDOWN OR OVERHEATING??ASK THE CONSUMER Bonds are weaker as the headline GDP number masked underlying strength in the economy. Thirty-year bonds are down 13/32, yield 5.88%. Ten-year notes are down 11/32, yield 5.75%. Two-year notes are down 4/32, yield 5.57%. Second quarter GDP was revised to 1.8% from an originally reported 2.3%. The factors pushing it lower were a larger trade deficit and a decline in inventories. The trade deficit widened by $14 billion and subtracted .6% from the number, due to strong imports. Inventories subtracted more than $7 billion from GDP. The consumer remains a dominant factor. Consumer spending rose 4.6% vs. an originally reported 4.0%. Domestic final sales rose 4.3% vs. 3.9%. The price deflator was revised lower to 1.5%. Preliminary third quarter GDP projections stand at 3.8%. Bonds traded lower as the data depicts a continuing strong domestic economy. Initial jobless claims fell 5,000 to 283,000. Expectations were for a small rise. The labor market remains tight. Nothing new here. Bad news for emerging market debt. Ecuador will miss its interest payment on Monday. This will be the first default on a Brady bond issue. Ecuador has said they are working on rescheduling their Brady bond debt for new uncollateralized securities. Friday will bring data on personal income and the revision to the University of Michigan?s consumer confidence index. Have a great day. bondsonline.com

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