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

To: John Madarasz who wrote (25062)	9/7/1999 11:46:00 PM
From: Les H	Respond to of 99985

TALK FROM TRENCHES: CORP FLOOD AND RATE-LOCKS; G-SPAN WORRIES By Isobel Kennedy NEW YORK (MktNews) - U.S. Treasury prices are lower across the curve Tuesday afternoon, but they remain in very tight ranges with thin volume even though the summer is more or less over. In the U.S., the focus for the week is corporate supply, Fedspeak and the dollar. There is ongoing debate whether corporate supply this month will be off the charts or whether it's being overblown. But most agree that Y2K concerns and customers closing their books earlier than normal should create a good deal of supply. And today's $10B IBM Credit filing is just the sort of thing that could pump up that supply. By the way, don't forget that some people think IBM has the uncanny ability to call market tops. Right out of the chute Tuesday morning, almost $4 billion in dollar denominated globals or eurobonds were launched. Since most of these deals are swapped, sources expect swap accounts to be active all month in the U.S. Treasury market. Rate-lock activity should also be ongoing. Some of today's weakness was attributed to rate-lock selling that usually occurs on Fridays but did not last week due to the early close. Going forward, sources expect the market to get hit down on rate locking but then to get a lift from rate-lock unwinds at pricing time. Hedging activity from the corporate supply will depend on how well the new deals are received, players say. Many players are sitting on the sidelines, preferring to let day traders play. There is a great deal of concern about the economy and inflation, despite Friday's rally on August employment. Fedspeak may provide some market clues. Mr. Greenspan speaks on the impact of new technology out in Michigan tomorrow. But there should be time for reporters' questions after the formal speech. Rest assured, someone will bring up market relevant questions. In addition to Uncle Al, speeches are expected from Fed McDonough, Meyer, Ferguson, Gramlich and King this week. The dollar finally got a lift overnight and is just a little weaker in New York trading Tuesday. Intervention by Japan over the Labor Day weekend never materialized. Perhaps ongoing jawboning by Japanese officials has finally given the dollar a foothold. Or perhaps it was weak Japanese economic data that gave the yen a push down. There has been talk that a large U.S. bank has revised down Japan's GDP forecast from -.5% to -1.8%. On Thursday, Japan's GDP is released and the BOJ meets. That date, Sept 9, '99, is already prompting worries about electronic glitches. And since Japan does not seem to do well in the good luck department, people are approaching the date with a foreboding feeling. Treasury Secretary Summers has a few speeches set for this week. Japan's chairman of the Financial Reconstruction Commission, Mr. Yanagisawa meets with Greenspan and Summers today. He is expected to give a press conference later this evening. Over in Europe, analysts are focusing on stronger-than-expected economic figures out of Germany and France, and European bonds are on the defensive. Bundesbank President Welteke's fairly pessimistic assessment of German economic development this year also didn't help the bond markets Tuesday. By the way, bond issuance in the new euro is picking up steam -- and the deals seem to be getting larger and larger. Tomorrow, Depfa is expected to price euro five-billion in a ten-year deal. Sources say rate-lock selling ahead of these jumbo eurobond deals is hurting European bonds much in the same way that U.S. corporate supply hurts U.S. Treasurys. By the way, oil continues to trend higher and analysts say OPEC seems committed to keep production cuts in place until Mar '00. And the IMF has revised upwards its growth forecasts for the U.S., Japan and Brazil for the 1999-2000 period. NOTE: Talk From the Trenches is a daily compendium of chatter from Treasury trading rooms offered as a gauge of the mood in the financial markets. It is not hard, verified news. Heating Bills Expected to Soar dailynews.yahoo.com It probably won't matter in the CPI or PPI. After all, UK has low inflation and their housing prices are expected to be up another 35% by the end of next year on top of the 15-18% in the first six months.