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

To: Les H who wrote (26162)	9/17/1999 12:24:00 PM
From: Les H	Read Replies (1) \| Respond to of 99985

Sounds like coordinated dollar intervention coming soon; OPEC meetings in the next week also TALK FROM THE TRENCHES: FLOYD PASSES, MOTIVATION DOES TOO By Robert Ramos & Joseph Plocek NEW YORK (MktNews) - With Greenspan's speech, August housing starts and the TVA pricing out of the way in the first hour of trading, the Treasury market has nothing left to do but continue to dig out of the "psychological" hurricane hole. Given all the hype, many Wall Streeters say Floyd was a dud with no follow through, just like the Treasury market. Prices are holding in a tight range because no one seems to care, sources say. Traders, anticipating the worst from Floyd, scrambled to cover shorts before leaving early yesterday, and hunkered down at home with a few bottles of wine as Floyd made his way north. Perhaps Treasurys are described today as sluggish because most players feel that way themselves. Besides, the market currently lacks a revelation to drive it in either direction, another source adds. Short dated paper continues to trade at intra-day lows while intermediates and the back-end hover a few tick off bottom. Players say twos should find some support at 5.61% with some decent buy interest reported there. Although Greenspan said this morning the Fed is ready with an "ample supply" of Y2K liquidity, an analyst points out that his comments did not reveal how Y2K concerns relate directly to monetary policy itself. And while Greenspan was giving his spiel, Fed Gov. Gramlich raised doubts that consumers need electronic money, and Fed Gov. Kelley assured the Fed has spared no effort in making Y2K preparations. Why all this renewed interest in Y2K all of a sudden? The Fed even says pricing changes for payment services, which are normally effective on Jan 1, have been delayed to April 1, 2000 in an additional measure to minimize operational difficulties at year-end. Greenspan perhaps summed it up best by noting that the media, which likes specific deadlines, is hyping up what will actually happen! There might be a few real sector adjustments, Greenspan said, including precautionary Y2K inventory accumulation that could cause "market pressure", but on a whole, banks and the U.S. economy is prepared for the turn of the year. Sources are still looking forward to the 1:00 p.m. EDT expiration of the October Treasury options. Traders expect it to be a non-event as the benchmark 30-year bond contract vacillates around the 114-00 strike. However, serial option expirations have a history of running strikes, option traders point out. Open interest in the 114-00 strikesn include 15,470 calls while only 8,572 positions remain within the 114-00 puts. On currency, Japan and the U.S. are close to a deal that would see the U.S. joining Japan in supporting the dollar. It would perhaps be in exchange for the Bank of Japan agreeing to use "unsterilized" intervention to ensure more liquidity in the system, the Nihon Keizai said in an unsourced report in its evening edition. So watch for dollar intervention, sources say. In contrast, Europe should be boring. Given the outlook for continued low inflation, the ECB has "no time frame at all" for an increase in its official interest rates, ECB Governing Council member and Portuguese National Bank President Antonio de Sousa said. --Suzanne Cosgrove and Kim Rellahan contributed. 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.