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To: Les H who wrote (28544)	10/6/1999 5:11:00 PM
From: Les H	Read Replies (1) \| Respond to of 99985

US DATA PREVIEW: SEP JOBS UP 220K; FLOYD TO AFFECT HOURS, WORKWEEK By Marco Babic economeister.com WASHINGTON (MktNews) - Employment in the United States during September is seen increasing by 220,000 from the previous month, and while the payroll data are seen as relatively unaffected by Hurricane Floyd, hours worked and hourly earnings are likely to have felt some impact according to a Market News International survey of economists. Earlier this week, a Bureau of Labor Statistics official told Market News International that because the hurricane hit after the start of the workweek, he expects the level of payroll jobs will not be as influenced as hours worked and hourly earnings. While not having made an estimate for average hourly earnings, the official did say he expected the hurricane to have depressed September earnings. As for the seasonal factors, the official said that once the seasonals are revised, as they were six months ago, they are not changed again as a matter of policy until the annual revision comes up again. Non-farm payrolls are seen up 220,000 in September according to the median forecast of 22 economists surveyed, which would represent an increase over the 124,000 gain posted in August. "Effects from Hurricane Floyd could impact the job count to some extent, but it's more likely the workweek will bear the brunt of the storm's fallout," according to Credit Suisse First Boston economists Jay Feldman and Mike Cloherty. JP Morgan economist James O'Sullivan said there are no "obvious precedents" to look to for judging hurricane effects, though he noted that in the past there have been months that have seen severe weather during the survey week, as is the case with Floyd. During the January 1996 blizzard, he notes, "The bad weather hit early in the sample week, so it is not truly comparable, although in the other cases the bad weather struck during the week." "Along with the hurricane, another possible reason for a weak payroll figure is the recent tendency for the September data to be understated when first released. While this pattern may just reflect the randomness of the sample, it could also reflect a recurring problem," O'Sullivan added. According to Market News International historical survey data, over the past six Septembers, payrolls have been overestimated six times by an average of 82,000, while over the past few months, the forecast miss has been a 29,000 overestimation. Average weekly hours are seen at 34.4 in September, down from 34.6 in August, while hourly earnings are seen up 0.3%, according to the MNI survey median. "Our rough calculations suggest that if the average worker was not at work for two days in mid-September, the total number of lost hours would approach 18 million, enough to slice 0.2 hour from the non-farm workweek" to 34.4 hours, said Lehman Brothers economist Joe Abate. Hourly earnings are seen rising 0.3% in September after a 0.2% increase in August, according to the survey median. The Department of Labor is scheduled to release employment data on Friday, October 8 at 8:30 a.m. EDT.

To: Les H who wrote (28544)	10/6/1999 5:14:00 PM
From: Les H	Read Replies (1) \| Respond to of 99985

TALK FROM TRENCHES: FED SLIPS THE NOOSE AROUND US TSYS By Isobel Kennedy & Rob Ramos NEW YORK (MktNews) - U.S. Treasury prices are mixed Wednesday. Prices remain in a very tight range with the short end a little softer and the longer end a little firmer vs. yesterday's 3 p.m. ET levels. Despite the fact that the market has basically managed to hold in and not break out of the recent range, there have been few positive comments about yesterday's Fed message. One veteran salesman said the Fed's tightening bias has the market in a noose. "Fear of the unknown is something Bond Daddies can't survive on." He also says Friday's employment report will only cloud the waters and "worse yet it may give false hope." (We know "Bond Daddy" is politically incorrect but it's a useful phrase that fits). Yesterday's change in bias to tightening leaves the market in "limbo", another says. The market is on hold, unable to move forward with any intensity or conviction because retail is on a "buyers strike" and the Street is innately bearish, others say. Several treasury players say the bond and stock markets had already been tightening for the Fed and after yesterday's announcement of a bias to tightening they will continue to do so. They say the Fed is keeping the financial markets under wraps going into year end and that saves them from actually raising rates and aggravating Y2K concerns. Players do look for some retracement of yesterday's 1-1/4 point drop in long bonds. But speculative and trading accounts also appear poised to sell into any strength ahead of Friday's employment report. Sources say any real money spending is going into agency paper. Agency spreads were unchanged after the Fed's bias change yesterday even though U.S. yields backed up to early August levels. They are tighter by 1-2 bps again this morning. Sources have reported seeing steady buying of agency paper Wednesday. And keep in mind the story from earlier in the week that Japanese accounts have been buying agencies because they do not have to mark them to market. One strategist says yesterday's policy statement provided fodder for both bulls and bears but leaves the market looking at the tea leaves again. "The FOMC resolved little and the dark tightening cloud remains over the market and will likely remain there until the economy finally slows." Some economists say their preliminary forecasts for key economic reports that will be released before the next FOMC meeting will be "enough evidence" for the Fed to tighten on Nov 16. Some say the Q3 employment cost index and advanced Q3 GDP, both to come out on Oct 28, will be key. Moody's says the outlook for Treasury bonds has worsened. It says the U.S. equity market withstood a shockingly steep ascent in bond yields which is bad for bonds. The report also says "we could be seeing the sharpest acceleration of global economic activity since 1994." Traders in London are taking the view that the rise in long U.S. Treasury yields following the FOMC tightening bias is making the U.S. equity markets vulnerable to further falls and hence is particularly negative for the dollar against the euro. While many traders seem to have raised their expectations for a European Central Bank rate hike since the weekend, several remain in the "no hike" camp, citing ongoing patchy economic growth in Euroland, particularly in the area's largest economy, Germany. While France and Ireland among others appear to be enjoying solid growth, the German economy has yet to show the same level of energy they say, arguing against a hike at the present time. The ECB is seen keeping official interest rates unchanged at Thursday's Governing Council meeting, Market News International understands from high-level contacts with one of the euro-zone central banks. And the prospects of an interest rate hike by the ECB before the end of the year can be excluded in the absence of dramatic new developments, MNI also understands based on this channel of information. It should be pointed out that the central bank concerned is among the euro-zone countries, which are not enjoying strong growth and can explain their current attitude, say analysts. Japan's FM Miyazawa said Wednesday that a meeting of finance ministers and CB governors from the G-7 powers, slated for next February, will be held in Tokyo, and joint currency intervention to weaken the yen is still on the agenda, according to Kyodo News. Market players said Miyazawa's suggestion of joint intervention still being on the agenda seems to hint at an agreement already in place. Last week, rumors abounded in Europe that a CB agreement had been made to defend the dollar at the Y103 level. JGBs collapsed Tuesday when LDP policy chief Kamei said that the upcoming stimulus package would be more than 13 trillion yen, larger than what the market was expecting. It also means they will have to sell much more debt. Wednesday, the Fed did overnight system repos to include agencies, mortgages, and governments in a new tri-party settlement. This is the new Y2K liquidity arrangement that officials asked for final dealer comments on, due Monday. Use of the new arrangements suggests the FOMC okayed it at yesterday's meeting. Perhaps the most important item in this article today is the sad news that the Bond Market Association did not recommend a full close for New Year's Eve on Dec 31. We humbly apologize for our mistake and for the disappointment we have surely caused!! 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. economeister.com