Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: ALTERN8 who wrote (21135)	7/26/1999 6:02:00 PM
From: Les H	Read Replies (1) \| Respond to of 99985

TALK FROM THE TRENCHES:US TSYS PRESSURED BY GSPAN,SUPPLY,DLR 13:29 EDT 07/26 By Isobel Kennedy NEW YORK (MktNews) U.S. Treasuries continue to trade heavy across the curve near the low end of Monday's narrow range. And despite some earlier buying, the market is plagued by worries over Greenspan, upcoming supply and the weaker dollar, sources say. Earlier Monday, real money accounts were lightly buying dips, central banks were buying twos, fives and 10s and others were selling stocks to buy off-the-run bonds. But most players are nervous ahead of Mr. Greenspan's Wednesday speech. They are also wary of a stronger than expected employment cost index on Thursday. Supply is another factor weighing on the market with the two-year auction Wednesday. And corporate supply just doesn't let up. U.S. companies are filing shelves at a rapid pace and sources say they want to sell before any potential Y2K problems hamper investment decisions in the fourth quarter. That said, corporations are selling into a tough environment, forcing recent deals to widen their spreads in order to get done. And U.S. swap spreads are also putting pressure on corporate and agency paper. Sources say five year swaps closed at +84 on Friday. This is very close to the spread of +98 that existed on October 14, 1998 at the height of the global risk aversion crisis. Could risk aversion be back in vogue? A jumbo deal from Malaysia's Petronas was expected next week but there has been talk it may get delayed. The prospects for higher U.S rates, fears of a China devaluation, concerns over China/Taiwan tensions and lack of liquidity in the Asian bond markets are all cited as negative factors. Sources say Asian sovereign spreads have widened as much as 70 bps in some cases over the last three weeks. Re-emerging financial worries at Daewoo, South Korea's second largest conglomerate, also weigh on the market. On Sunday, the Korean press reported the S.K. government will provide 2-3 trillion won ($1.6B-2.5B) in emergency loans to investment companies being hit by falling sentiment because of the ongoing Daewoo Group troubles. Government also pledged to inject public money into financial institutions if their non-performing loans increase because they help bail out Daewoo. Interestingly, some South Korean banks will try to test the waters. Sources say Kookmin, Industrial Bank of Korea and Shinhan may each sign $1B global medium-term-note programs in August. Merrill Lynch would underwrite. Meantime, there's been lots of speculation about what is going on with the dollar lately. A weekend Barron's article ponders whether the dollar has seen its highs. "It may very well have, thanks to a sudden reversal of fortune in key economies around the globe, particularly in Europe, and a U.S. trade imbalance that's increasingly gaining attention in markets and on Capitol Hill." And the Business Times, a Singapore publication, speculated on Monday that Treasury's Summers may be taking a different tack than his predecessor and may be prepared to use the exchange rate as a tool to pressure Japan into taking steps to accelerate the pace of its economic reforms. The story suggests that an unstated U.S. policy of tolerating a weaker yen may have come to a halt. And here is an interesting point made by some foreign exchange traders. They say the change in the dollar's fortunes roughly coincided with the change in leadership at Japan's MOF and at the U.S. Treasury. Do both Kuroda and Summers have to get their credibility up to the levels enjoyed by Sakakibara and Rubin? Or does the change in guard shift a fundamental change in foreign exchange policies in Japan and the U.S.? And what does Treasury Summers have to say? Monday he told reporters that "dollar policy has served us well" and a strong dollar policy will continue. Over in Europe, many analysts say the continuing decoupling of European bond prices from the U.S. is due to tough inflation talk by European officials and economists. Others disagree and say the chances of a near term rate hike in Europe have actually lessened since ECB's Duisenberg hint of a tightening bias. These analysts argue that a strengthening euro-dollar is actually reinforcing the view that there is no need for higher rates in Europe. Over in Japan, analysts say JGB's are underpinned by "zero" interest policy, but seem to be slowly coming under the pressure because of a return to supply-demand imbalance. The Finance Ministry will sell 600 billion yen in 2 year bonds tomorrow and 1 trillion yen in 4 year bonds on Thursday.

To: ALTERN8 who wrote (21135)	7/26/1999 6:13:00 PM
From: donald sew	Respond to of 99985

ALTERN8, >>>> Even if he talks about raising rates and scares wallstreet once again? It seems like most times when he speaks the market goes down. It's almost as though the market hates him, or just loves using him as an excuse to scare the hell out of investors. <<<< Im not a fundamentalist, but from a technical position if we dont rebound by then, it would be very bad for the market. The bounce could only be a 1-2 day thing, but if we dont even get that then the market would really be in trouble and could technically be on the verge of crashing. I will leave it to you and others to decide what GREENSPAN will say seeya