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To: isdsms who wrote (1896)	6/11/1999 2:15:00 PM
From: Mao II	Respond to of 12662

Ira & Thread: Of note: cbs.marketwatch.com PPI as-expected, retail sales strong Treasurys plunge By Julie Rannazzisi, CBS MarketWatch Last Update: 2:01 PM ET Jun 11, 1999 Economic forecast Banking stocks NEW YORK (CBS.MW) -- A deluge of selling sent Treasury prices reeling Friday as nervous investors bailed out of the market. The morning's string of economic news was of little comfort to the market, offering no fresh information to skittish investors. The 10-year briefly breached 6 percent yield just three days after the 30-year reached the key level. A close above 6 percent on the 10-year was not seen since October 1997. Rick Santelli of Sanwa Futures said people were liquidating on light volume, exacerbating the slide. This week's volume was defined by many in the market as "pitiful." "The price action is awful. Nobody wants to be long," remarked Brian Robinson, senior bond strategist at 4Cast. The benchmark 30-year bond shed 19/32 to yield 6.117 percent. A close above 6.13 wasn't seen witnessed since December 1997. The 10-year was off 12/32 to yield 5.989 percent while the 5-year lost 1/8 to yield 5.878 percent. The 2-year inched down 1/32 to yield 5.675 percent. The discount rate on the 52-week bill was up 2 basis points at 4.88 percent. In the futures pit, the September T-bond tumbled 24/32 to 114-06. With the market in liquidation mode, strategists said it was absurd to try and pick a bottom. Robinson said there was absolutely no buying at all. And with no buyers to be found, it doesn't matter how many Fed rate hikes the market has already discounted, he added. The market won't be able to do better. No help from data Friday's batch of economic news, which had been awaited by participants throughout the week, offered little to allay investors' frayed nerves. The May PPI rose 0.2 percent overall and 0.1 percent at the core, which excludes food and energy components. The number matched economists' expectations. See full story. Retail sales rose by a sturdy 1.0 percent overall and by 0.5 percent excluding autos. A survey conducted by CBS MarketWatch.com had projected a 0.6 percent rise in May retail sales and for a 0.4 percent gain excluding autos. "This does represent something of a slowdown after the huge January and February increase but sales are still rising quite rapidly," said Ian Shepherdson, chief U.S. economist at High Frequency Economics. This report will not change minds at the Fed as consumers are still spending, he added. Despite all the waiting this week for the release of Friday's economic figures, the numbers don't give the market any added information. Retail sales suggest consumer spending remains extremely healthy, which the market knew. And the PPI was favorable as oil prices have settled down since the April release. The bond market saw a brief pop following the numbers, which was met by sellers, demonstrating how nervous investors remain ahead of next week's consumer price index. "The mindset of the majority in the market is on the bearish side. They're worried about [Fed Chief Alan] Greenspan next week," said Jim Nealis, head trader at PaineWebber. "There's more willingness to sell on upticks than buy on dips." Greenspan will be speaking before the Joint Economic Committee next Thursday and market watchers expect him to hint at what the Fed's plan of action will be at the June 29 and 30 Federal Open Market Committee meeting, which would eliminate surprises. In other economic news, the University of Michigan's preliminary June consumer sentiment index stood at 109.0, up from May's 106.8. See daily calendar, weekly calendar, and earnings calendar. U.S. stocks turned lower as bond yields surged. The Dow Jones Industrial Average fell 78 points while the tech-rich Nasdaq was off 0.9 percent. See Market Snapshot and world indices. In the commodity arena, the Bridge/CRB index rose 0.32 to 192.12 while July crude rose 17 cents to $18.02. See latest commodity prices. The Fed and the curve The difference between the yield ($TYX) on the 30-year bond and 2-year note widened significantly to 43.7 basis points from 39.8 basis points at the close Thursday, as long-term issues underperformed heavily, bucking the recent trend. In fact, the yield curve has witnessed some massive flattening in the past three weeks: the 2s/30 spread stood at 62 basis points on May 17 -- the day before the Fed shifted to a tightening bias. In the meantime, the spread between the yield ($TNX) on the 10-year note and 30-year bond narrowed to 12.2 basis points from 13.1 basis points at the close Thursday as tens lagged. The spread stood at 25.6 basis points on May 17. This is the narrowest the yield differential between the two securities has been in about three years. 10- and 30-year bond yields compared The 30-year, Nealis said, always benefits when the Fed is in a tightening mode compared to other issues on the curve as it means the central bank is fighting inflation. In addition, the 10-year sector has been pressured by heavy issuance in the corporate sector in recent weeks. Nealis said that during periods when the market is anticipating a move in interest rates on the Fed's part, the best way to determine value is by watching the front end, the most sensitive to changes in the fed funds rate. In currency markets, meanwhile, the dollar extended losses against the yen, a day after the Bank of Japan came into currency markets to buy greenbacks in an attempt to halt its slide. See related story. Dollar/yen was recently changing hands at 118.07, off 0.6 percent from Thursday's close. The euro fell 0.1 percent to 1.0480. See latest currency rates.

To: isdsms who wrote (1896)	6/11/1999 2:21:00 PM
From: Mao II	Read Replies (1) \| Respond to of 12662

Ira: To me, it's not even close. CYMI has a virtual monopoly on lasers necessary for the next generation of chips below .18 microns. If you are looking for a short term trade, I'd buy CYMI in 20-21 range. Downside risk from here, in event of market tank, is in the 18 area. A more bearish market could take it to 15-16. I would think that's the bottom barring a Depression style collapse. KLIC I don't follow that much, but given its biz, I would expect revs from cycle upturn to kick in a bit later, hence its price might lag. FWIW. M2