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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 671.91

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Nov 14 4:00 PM EST

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To: Les H who wrote (36318)	12/31/1999 9:50:00 AM
From: Les H	Read Replies (1) of 99985

US TSYS OFF SLIGHTLY IN EARLY US; FOCUS ON REPO, FUNDS MARKET NEW YORK (MktNews) - Prices of U.S. Treasuries were slightly lower Friday morning ahead of the New Year's weekend, after financial markets in Tokyo and London were closed Friday. There were no transactions posted for about the first half hour of trading, traders said. "Those firms that have people in today are probably only partially staffed and a lot of midtown banks and brokerage firms gave employees a holiday on security concerns" ahead of the massive New Year's Eve celebration expected in Times Square Friday night, a trader said. The U.S. bond market closes early at 1 p.m. EST Friday and will reopen Monday. Most of the focus Friday will be on repo desks where traders will busy themselves lining up financing funds for the three days that will encompass the transition to the year 2000. A hangover effect of Y2K-related problems that could surface over the weekend could have an even greater effect on the costs of money on Monday, repo traders said. Federal funds opened at 4 1/2% and traded up to 5 1/2% by 8:15 a.m. EST. Funds trading has been volatile over the past two days and dealers expect that trend to worsen Friday. New Year's Eve is traditionally the most difficult day of the year to get financed and with fears of potential Y2K computer glitches looming, most traders expect that funds rates will suffer even wider swings this year. The Federal Reserve has added over $125 billion in temporary reserves to date that span the New Year's weekend to add liquidity to alleviate potential Y2K-related disruptions that might surface between Friday and late next week. Meanwhile, Russia's President Boris Yeltsin unexpectedly resigned Friday. Prime Minister Putin has become acting President and elections will be held in March. Russian stocks are up with the RTS Index +25.25 points to 175.26 or a +16.83% gain. There was little safe-haven buying of the dollar or Treasuries in response to the news, mainly because most institutions already marked down the value of their Russian holdings after the ruble was sharply devalued a year ago, sources said. At 8:20 a.m. EST Friday, the 30-year bond was trading at a yield of 6.423% vs. 6.426% at 3 p.m. Thursday.

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