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

To: pater tenebrarum who wrote (18940)	6/30/1999 1:48:00 PM
From: Les H	Read Replies (2) \| Respond to of 99985

Looks like Japan preparing to raise interest rates also... Rate Hike Jitters Bonds are lower this morning as nervous traders await the outcome of the FOMC meeting and survey continued strong economic data. Thirty-year bonds are down 18/32, yield 6.11%. Two-year notes are down 4/32, yield 5.75%. We will be notified of the FOMC policy change around 11:15, Pacific Time. Expectations are for a rate hike of 25 basis points. This would bring the fed funds rate to 5.0%. It will be very important to watch the accompanying statement to see if the Fed leaves intact its bias to tighten or moves to a neutral bias. Leading economic indicators for May rose .3%. This matched expectations. Coincident indicators rose .2%, while lagging indicators were unchanged. This number implies continued economic expansion. The Chicago Purchasing Managers survey for June rose to 60.0 from 57.9. A small decline was expected. All components except supplier deliveries rose. The prices paid component rose almost five points to its highest level in eighteen months. This number confirms the rebound in the manufacturing sector is firmly in place. Bonds extended their losses on the data. Bank of Japan Governor Hayami said that the near zero rate monetary policy will not continue indefinitely. This caused the benchmark jgb (Japanese sovereign debt) to fall 1.5 points. The yen also rose on the belief the Bank of Japan may be preparing to raise interest rates. Even after we get the FOMC rate decision behind us, we will still have to deal with the National Association of Purchasing Managers survey on Thursday and the unemployment report on Friday. Both of these numbers will be important to the bond market. Have a great day. bonds-online.com