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To: F Robert Simms who wrote (35016)	10/4/1999 7:44:00 AM
From: Chip McVickar	Read Replies (1) \| Respond to of 44573

Articles on Interest Rates US TSY MKT OUTLOOK: EXPECTATION SHIFTS TO OCT. FED TIGHTENING By Jill Bebar NEW YORK (MktNews) - The market's expectation has shifted to largely anticipating a 25 basis point Federal Reserve rate increase next week, and some analysts are saying the market would be disappointed if the Fed does not act. Sentiment shifted Friday after unexpectedly bearish economic data, including new home sales and sharp increases in the prices paid components of both the National Association of Purchasing Management and Chicago purchasers surveys, analysts said. "It is becoming more and more obvious the U.S. economy is not slowing down. The Fed cannot afford to do nothing now and run the risk of being locked in a 5 1/4% funds rate through year-end," said James Kochan, bond market strategist at Robert Baird & Co in Milwaukee. Zane Brown, director of fixed income at Lord Abbett & Co., agreed. "It would be favorable to tighten and get it out of the way instead of shifting the bias and painting a dark cloud hanging over the markets throughout the balance of the year," he said. On Aug. 24 the Fed increased short-term interest rates 25 basis points and kept a neutral bias... Analysts said there were rumors Monday's Bank of Japan's third-quarter Tankan survey will be on the strong side. Glassman said the survey was crucial to the currency markets because signs of economic strength in Japan have bolstered the yen vs. the dollar recently. Glassman said bond market players will remain on edge about higher interest rates until there are more definitive signs of slowing in the consumer sector. Next week's calendar also includes August housing completions Monday, August leading indicators and nonmanufacturing NAPM Tuesday, August factory orders Wednesday, September Challenger layoffs, September chain store sales and August consumer credit Thursday and August wholesale inventories and September ECRI and CIBCR inflation indexes Friday. ----------------------- No rate hike on this article: Fed Seen Sitting Tight On Rates - For Now By Knut Engelmann CHICAGO (Reuters) - It is back to basics for the U.S. Federal Reserve -- growth at home and a nascent recovery abroad have the world's leading central bank focused once again on domestic inflation. Still, Fed policymakers gathering for a crucial interest rate meeting this week are expected to leave borrowing costs unchanged -- at least for now -- as they wait to see if patchy evidence of rising prices will turn into broad-based inflation pressure. Fed officials and economists at a Chicago Fed conference at the end of last week were reluctant to express their views on the future of interest rates that they have twice nudged up this year to keep inflation at bay. But just two days ahead of Tuesday's rate meeting, that silence in itself was a signal: The Fed usually telegraphs its intentions well ahead of time to avoid out-sized reactions in financial markets. A slew of benign inflation data over recent weeks and the lack of clear warnings from the central bankers' camp has the vast majority of Wall Street analysts convinced that no Fed move is imminent. Only one of the 30 top trading firms polled by Reuters Friday said it expects the Fed to raise rates this week... ...Thirteen of the trading firms polled by Reuters expect the Fed to shift to a so-called ''tightening bias' next week that would indicate they are leaning toward a rate hike as their next move. Seven firms predicted the central bank would raise rates at its next meeting, set for Nov. 16. ______________________________________________________________________ newsletter@marketdd.com (MarketDD.com)