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To: Vendit™ who wrote (21080)	6/9/1999 5:01:00 PM
From: Jenne	Read Replies (1) \| Respond to of 41369

from briefing today: ... 10:23 ET ****** 30-YEAR BOND 6.011%: Yes, this page is about stocks, but one of the most important issues for stocks is the interest rate environment. The bond is trading above the 6.0% yield today for the first time in more than a year. Though the move through an arbitrary level like 6% is in and of itself not that important, the prolonged uptrend in rates since last fall is. So too is the threat that the Fed will raise the funds rate a quarter point to 5.0% at its next meeting on June 30. Until and unless the interest rate threat recedes, there will not be a summer rally in stocks. The key factor in determining the interest rate outlook will be next Wednesday's Consumer Price Index report. It was the surprising 0.4% increase in the April CPI ex-food and energy number that rocked the bond market and prompted the Fed to adopt a tightening bias at its May 18 meeting. Though that CPI report did raise the threat of accelerating inflation, it followed five exceptional CPI reports which had suggested that inflation was still falling. Briefing.com has been arguing that the April report was a one-month fluke, most likely the result of a problem with seasonal factors. We expect a very friendly 0.1% increase in May core CPI as a result. If we were to see such a benign report, market expectations of a Fed tightening would fade and the bond yield would drop back below 6%. Then and only then will stocks be set up for a summer rally.