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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: goldsnow who wrote (36273)	7/1/1999 8:40:00 PM
From: Rarebird	Respond to of 116896

Was Yesterday's rise in the long bond a " suckers rally?" Thursday July 1, 5:09 pm Eastern Time Note: this article has a followup with more information. U.S. Treasuries jolted, drop as Fed view changes By Steven Scheer NEW YORK, July 1 (Reuters) - If Wednesday was a dream, then Thursday was a nightmare for the U.S. Treasuries market. Treasuries were rocked early and often after market players realized they may have been too quick to sharply discount the chances of another near-term Federal Reserve rate hike. The reevaluation of the Fed's intentions had already sent Treasuries moderately lower in the morning when the National Association of Purchasing Management (NAPM) reported that manufacturing activity in June was more robust than expected. That news sent the 30-year bond down more than 1-1/2 points. An afternoon wave of short-covering rescued the market somewhat, but Treasuries still ended lower and the bond snapped a four-day winning streak. ''The market was all over the place today,'' said Bill Kirby, co-head government bond trader at Prudential Securities Inc. ''There was good selling early but we came back pretty decently.'' In late trading, the 30-year bond was at 89-19/32, down more than 1/2-point, while its yield rose to 6.01 percent from 5.98 percent at Wednesday's close. At the short end, with the two-year note was down 3/32 at 100-11/32, recovering from being down 1/4-point earlier in the day. Its yield rose to 5.57 percent from 5.53 percent. ''The passage of time led people to believe ... that Wednesday's dovish policy statement did not mean the market would have a free pass for the rest of the summer or rest of the year,'' said Patrick Dimick, senior market economist at Warburg Dillon Read LLC. Much of the change in sentiment stemmed from the market coming to grips with the notion that the Fed's shift to a neutral stance after a rate hike is its usual practice. When the Fed hiked rates seven times in 1994 and early 1995, the central bank adopted a neutral directive each meeting. ''People are wiser to that today than at 2:15 (p.m.) yesterday,'' Dimick said, who characterized Wednesday's post-rate hike rally as ''dreamy.'' ''The sober assessment says that while we're off the hook for aggressive tightening, it's not all rosy when you look down the road,'' he added. Treasuries, which soared on Wednesday, started to fall during the night in overseas trade as foreign investors believed the market misinterpreted and overreacted to the Fed's bias move. The selling continued into the U.S. as hedge funds and dealers sold en masse, while retail investors booked profits after emerging from the sidelines on Wednesday. ''Guys wanted to take profits because the Fed is still raising rates; it may be once, twice or three times,'' Kirby said. Chances of a hike at the next Fed policy meeting in late August rose on Thursday, after the key NAPM index of manufacturing activity rose to 57.0 in June from 55.2 in May. The market was further rattled by an increase in the prices and supplier deliveries measures. (Note: this article is ''in progress''; there will likely be an update soon.)

To: goldsnow who wrote (36273)	7/2/1999 1:21:00 AM
From: PaulM	Respond to of 116896

Goldsnow, oil has once again proven itself a political commodity. The producers have to worry about taking their foot off the accelerator? They've proven that a small cut back could practically double the price of oil. That means the impact of higher prices on revenues has far exceeded any loss of market share or demand. Straight Supply and Demand Economics 101 tells us rational, profit maximizing player would have done this long ago. A rational monopolist wouldn't stop until higher prices result in enough loss of market share to outweigh the higher price per unit. Based on what we've seen so far, it would appear we're nowhere near that point. What I'm curious about is what political carrot no longer seems worth a low oil price in the eyes of the producers.