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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (27773)	7/25/1999 7:05:00 PM
From: LABMAN	Read Replies (2) \| Respond to of 50167

the week ahead Home - Yahoo! - Help [ Business \| US Market \| By Industry \| IPO \| AP \| S&P \| International \| PRNews \| BizWire \| CCN ] Sunday July 25, 6:01 pm Eastern Time WEEKAHEAD-Emerging bonds seen driven by US markets NEW YORK, July 25 (Reuters) -- Emerging market debt, sensitized to the moods of U.S. financial markets, will be closely watching new testimony from Fed chief Alan Greenspan this week, analysts said. Also, the outcome of elections to the constitutional assembly in Venezuela held Sunday will grab market attention, investors said. President Hugo Chavez has said the assembly could dissolve Congress and the Supreme Court. Analysts fully expect Chavez-backed candidates to sweep the elections, which are seen as a vote on entrenched graft and cronyism. First partial results are due out Sunday evening at around 8 p.m. local time (2000 EDT/0000 GMT Monday). There is a ''high level of uncertainty in the market regarding the political outlook in several distressed emerging market countries, leading investors to again question the commitment by the authorities and their willingness to service obligations in the future,'' said Jose Cerritelli at the Provident Group in a research note Friday. Argentina recently swung regional markets after comments by one of its presidential candidates raised fears that it might seek forgiveness of some of its $100 billion foreign debt. Those concerns were laid to rest by the current administration, and the candidate himself, but the flap has put markets on edge. Market watchers will also keep a close eye on the second leg of key testimony by Federal Reserve Chairman Greenspan. Greenspan will speak before the Senate committee Wednesday after addressing the House Banking Committee this past Thursday. Market watchers will look for more confirmation of Greenspan's remarks that the U.S. central bank will remain vigilant against inflation. His comments last week were seen as having an unexpectedly hawkish bent to them. Some investors believe the U.S. could see another 50-basis point increase in the federal fund rates this year, thus erasing the 75-basis point drop in the key interest rate last fall. The Fed last raised the key Fed funds target on June 30 by 25 basis points to 5.0 percent. For emerging markets, the key is how U.S. Treasuries respond to any Fed statements. ''If U.S. Treasuries break this level, then we may see some selling in emerging markets. But if Treasuries stay in a range, emerging markets will hold,'' said Dan Peirce, head of emerging markets research at BancBoston Robertson Stephens. In addition, investors will also be looking for an agreement between the International Monetary Fund and Ecuador. Many analysts said an announcement could come over the next few days. Ecuador has been negotiating for a $400 million loan from the IMF that will pave the way for restructuring other external debt with the Paris Club of government creditors. Meanwhile, several Asian equity markets have sold off in the last two weeks, particularly in Hong Kong. BancBoston's Peirce said any further weakness in Asian equities could hurt U.S. markets and in turn pressure emerging market bonds.