Piffer OT - And Other Assorted Nuts Message Board

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Strategies & Market Trends : Piffer OT - And Other Assorted Nuts

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To: The Phoenix who wrote (30811)	4/28/2000 11:24:00 AM
From: John Pitera	of 63513

Gary, it may well make sense to take some money off the table. Interest rates are saying maybe we see a 50 basis point rise by the FED in May. ------------ 17:14 ET 30-year: -19/32..5.984%....GNMAs: -14/32....$-¾: 106.41 Treasury Summary: Another ugly day for the Treasury market as inflation fears and associated anticipation of Fed rate hikes boost yields. Employment costs rose by a much stronger than expected 1.4% in Q1 and the GDP deflator also topped expectations at 2.7%. Though GDP growth was slightly below expectations at 5.4%, this growth rate was still very strong and was overshadowed by the inflation figures. Though sharp declines in stock prices provided a temporary lift to Treasuries in the morning, their subsequent improvement left Treasuries with nothing but rate hike fears to ponder. Forecasts of a 50 bp rate hike in May are now common, and the curve inverted further as a result...more -------------- 14:06 ET 30-year: -24/32..5.995%....GNMAs: -13/32....$-¾: 106.34 Fed Pros and Cons: After today's worse than expected inflation indications, the market is moving to a nearly 50/50 split on the chances for a 50 bp rate hike on May 16. The probability has spiked from 15% yesterday to 43% today. Though these numbers have significantly increased the risk of a 50 bp hike, there is still one compelling argument for moderation -- Greenspan's words. He recently commented that the market is expecting continued "gradual" rate hikes. That's like a CEO saying that analysts expect such and such for earnings -- it's an implicit endorsement of the forecast. Until we hear Greenspan change his tune, we are betting on another 25 bp hike, but admittedly, the risks of 50 bp increased today.

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