Y2K WATCH: SINGAPORE, HK TO BE FIRST BIG TRADING TEST ON MON.
By Isobel Kennedy and Robert Ramos
NEW YORK (MktNews) - As the time draws nearer for market players to see if Y2K distortions will affect operations in the financial markets, here are a few observations:
The first major business center that could experience Y2K difficulties will be New Zealand. It is 18 hours ahead of Eastern Standard Time in the U.S.A. EST. When it is 6:01 AM in New York on Friday 12/31/99 it will be 00:01 AM on Saturday 1/1/00 in Wellington, N.Z.
Moving around the globe, these other locations will hit Jan. 1, 2000 in the following chronological order: Guam, Sydney, Tokyo, Singapore and Hong Kong, Beijing, Bangkok, New Delhi, Moscow and Baghdad, Nairobi, Cairo, Johannesburg, Eastern Europe, Europe, London, Buenos Aires, New York, Chicago, Los Angeles, Alaska, Hawaii, Samoa. The last place to move into the new year will be Eniwetok, which is an atoll in the Marshall Islands.
While New Zealand will be the first major country to welcome the New Year, it will be closed for the holidays on Friday along with many other business centers around the world. London, Tokyo, Moscow and many other cities will also be closed on Monday, Jan. 3.
The first financial markets to open for business on Monday, Jan. 3 will be Singapore and Hong Kong. They are thirteen hours ahead of New York Eastern Standard time. Beginning around 8:00 PM EST on Sunday night, TV stations will begin covering the opening of those financial markets.
Interestingly, Moscow is also closed on Jan. 4. This is the one area that sources worry could experience some new millennium trouble because they are not believed to be as Y2K compliant as many other cities. Wellington, N.Z., is also closed on Jan. 4.
Another interesting Y2K related fact concerns air travel. A spokesperson for the Federal Aviation Administration confirms that aviational clocks are set on Greenwich Mean Time. Therefore, at 12 Midnight GMT on December 31, it is only 7PM EST in the U.S.A but airplane clocks will be already be turning to Jan 1, 2000.
TALK FROM TRENCHES: US TSYS BETTER BUT Y2K CAPS GAINS
By Isobel Kennedy
NEW YORK (Mkt News) U.S. Treasuries are bouncing again Thursday for the second day in a row. The market friendly Chicago purchasing Managers' index gave the market its lift but gains should be limited due to year end balance sheet and Y2K restraints, market sources say.
For those holiday-weary players who might have slept through the release, the index came in at 54.6 vs 56.8 in the November report. A drop in the prices paid index to 65.5 from 70.9 also helped the market.
As expected, the market gains came on light volume as many traders are either on vacation or are sitting at their desks with their hands tied because of year end.
But sources say these players will put Thursday's economic data releases in the "bank" waiting until the new year to trade on this information.
Here's an interesting tidbit to think about as the holiday slowdown drags on: One economist points out there were two large buyers of Treasuries this year. The Fed bought $56.3 billion in the first nine months of the year for foreign entities or in coupon passes. And private pension funds bought $13.6 billion. Households, corporations, and life insurance companies were sellers.
And with the NASDAQ up 84% this year, why would Mom and Pop buy U.S. Treasuries? And take a look at the gains overseas. Moody's says an unweighted average of 10 emerging-market equity indexes revealed an average advance of 61% since year-end 1998.
Speaking of investments, municipal bond yields are attractive, sources say. Institutional buyers are on strike and mom and pop are engaged in tax swapping. They are taking losses on muni bonds and using those losses to offset equity gains. Now is a good time to pick up some bargains, they say. Come January demand will pick up due to the "January reinvestment" and the fact there will be no pick up in new supply until at least mid-January. A NYC resident in the 36% tax bracket can buy a AAA insured "0" coupon New York issue due in 20 years that yields 6.00% to maturity - approx dollar price is $31. Issue is triple tax exempt from federal, state and local tax and the taxable equivalent yield is 10.49%.
What else is of interest in the financial markets? How's this: One analyst said that some of the euro selling that took place earlier this week may have been related to the upcoming change in Hungary's foreign exchange basket. Starting Jan 4, the Hungarian forint will be in a crawling peg regime tied 100% to the euro rather than the previous basket of 70% euro and 30% USD. Those investors that are long the forint and short the basket need to sell euro and buy dollars in order to match the realignment, the analyst says.
Enough about the markets. Let's get on to more interesting things. Like Y2K -- what else is there to talk about?
What is the worst Y2K-related thing that can happen? Credit card failure, of course! 20,000 HSBC card swipe machines in the U.K. failed Wednesday because they rejected cards that contained the year 2000!
Hey -- maybe this will offset the so-called "ATM Effect." One strategist predicts that everyone will take extra cash out of the bank for Y2K emergencies. But he also believes the money will never get put back into the bank if no emergencies arise. He thinks the money will get squandered.
While New Zealand will be the first major country to welcome in the New Year -- at 6:01 am EST Friday, it will be 12:01 am on 1/1/00 in Wellington. But Wellington and many other major business centers will be closed. London, Tokyo, Moscow and many other cities will also be closed on Monday. Singapore and Hong Kong will be open on Monday, however. Beginning around 8:00 PM EST on Sunday night, U.S. TV stations will begin covering the opening of those financial markets. This will be our first good chance to see if any Y2K glitches materialize that might affect financial operations.
Talk From the Trenches is a daily compendium of chatter from Treasury trading rooms offered as a gauge of the mood in the financial markets. It is not hard, verified news. |
