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To: Haim R. Branisteanu who wrote (50553)	7/2/1999 10:00:00 AM
From: bill meehan	Read Replies (1) \| Respond to of 86076

Haim, the real yield on the long bond has been relatively high for quite some time (going by memory, and I believe others on the thread are more well versed in the bond market). The concern, IMO, has more to do with the fact that there's much more skepticism about the "new era" in bondland and that the expansive growth in money supply and huge demand for credit is likely to keep real yields high. In addition, as supply shocks continue to dissipate, the market is anticipating rising inflation. Treasuries should rally when the stock market breaks and fears of a global recession are reignited. 07/02 9:58A (RT)ECRI future U.S. inflation gauge 110.6 in June Story 8123 (I/US, I/ECI, I/FRX, I/MUNI, I/DBT, I/STX, H/) NEW YORK, July 2 (Reuters) - The Economic Cycle Research Institute's (ECRI) monthly U.S. future inflation gauge (FIG) rose to a reading of 110.6 in June from a revised reading of 110.2 in May, ECRI reported Friday. The gauge was led by recovery in the growth rate of industrial materials prices, plus stronger growth in real estate loans, the report said. "Underlying inflationary pressures are rising slowly but steadily," the report said. "The Japanese recovery predicted in May by ECRI is much more evident, and could help reverse the downtrend in U.S. import prices that has underpinned the current period of noninflationary growth." The future inflation gauge is designed to anticipate cyclical turning points in the rate of inflation, according to the report. (( -- N.A. Treasury Desk, 212-859-1660)) REUTERS Rtr 09:58 07-02-99