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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: pater tenebrarum who wrote (16696)	6/10/1999 12:26:00 PM
From: Les H	Read Replies (2) \| Respond to of 99985

Is Japan Back? and Britain Lowers Rates to Keep Inflation Up Bond yields hit a 13-month high on news of a very strong Japanese GDP report. Thirty-year bonds are down 19/32, yield 6.07%. Two-year notes are down 3/32, yield 5.64%. Japan's first quarter GDP rose 1.9%, 7.9% annualized. Expectations were for an increase of .1%. Spending by consumers and businesses pushed the number higher. Japanese officials are urging the number be viewed with caution, stating it is to soon to declare the recession over. Our bonds fell sharply on the news. If the Japanese economy is on the rebound, one more factor has been eliminated in preventing the Fed from tightening. The dollar fell sharply on the news. It traded as low as 117.57 yen before the Bank of Japan intervened and sold yen. The dollar currently sits at 118.90 yen. The Bank of Japan wants to see the yen remain weak in order to keep their exports attractive. Japan is scheduled to announce a supplemental budget tomorrow. We will see how this number affects the plan. In a surprise move, the Bank of England lowered their benchmark interest rates 25 basis points to 5.0%. Since January the pound has risen 8% in value against the euro, preventing UK businesses from raising prices. As a result, the central bank felt they would undershoot their inflation target of 2.5%. German industrial production rose a stronger than expected 1.0%. This could be a further sign the largest economy is the euro zone area is on the rebound. Domestically, jobless claims rose 14,000 to 323,000. A flat number was expected. The late Memorial Day holiday this year may have adversely affected the seasonal factors. To soon to say the labor market is beginning to loosen. Today's speakers include Fed Governor Ferguson and Fed Chairman Greenspan at Harvard. Friday will bring the much-awaited PPI and retail sales reports. Have a great day. bonds-online.com