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

To: Les H who wrote (34214)	11/26/1999 8:27:00 PM
From: Les H	Read Replies (2) \| Respond to of 99985

TALK FROM TRENCHES: HOLIDAY MODE; DATA, MO-, YR-END NEXT WEEK By Robert Ramos NEW YORK (MktNews) - U.S. Treasury prices are softer with yields up about 2 basis points across the curve. Accounting for higher yields are softer JGBs, EMU-11 bonds and the euro-dollar hitting a new life-time low of $1.0070, sources say. European Central Bank President Duisenberg told the FT Friday he is concerned the euro's weakness will damage public confidence in the single currency and that prompted the idea that the next ECB rate rise, if it comes, might occur sooner than some people had supposed. Yesterday, ECB board member Solans reportedly said the ECB has no intention of intervening to support the single currency. And JGB weakness was blamed on talk that some city banks and lifers have started to worry about how long the BOJ will maintain its "zero" interest rate policy. Back on the mainland, today is expected to be quiet as many traders and salespeople took the day off following the Thanksgiving Day holiday. Greenspan sees a yet tighter U.S. labor market than most economists, helping to explain the Nov 16 rate hike, according to Business Week. Citing unnamed Fed policy makers, the magazine notes that Greenspan looks at a broader measure of the job market beyond the official unemployment rate. "His gauge of 'the pool of people seeking jobs,' calculated by Fed officials using Labor Dept. data, includes unemployed workers aged 16 to 64 who are actively seeking work or say they want a job." Also catching the Fed chairman's eye: a drop in the number of employees who say they're working part-time because they can't find a full-time job. The magazine said the shrinking supply of available workers indicates the economy is growing unsustainably fast. But activity is expected to pick up next week. The economic calendar has some interesting releases that will be closely watched for their impact on the thinking of the Federal Reserve Board. Chicago Purchasing Managers Index and Consumer Confidence are released Tuesday. Construction spending, leading indicators and National Association of Purchasing Managers Index come out Wednesday. Thursday is new home sales and Friday, the November employment report. Another event that is expected to influence flows next week is month-end index fund buying on Tuesday. Because of the quarterly November refunding, funds are expected to have larger-than-normal extensions, sources say. And keep in mind that several large dealer shops have fiscal year end on November 30. That should keep them from placing any big bets on the market. On the other hand, should they get hit with some positions from customer accounts, they may be forced to dump those out immediately. Agency supply is already being talked about for early December. Fannie Mae should be coming with its next benchmark issue. Sources speculate it will be a re-opening of its 5Y issue and the size could be $3 to $4 billion. Players also think Freddie Mac will announce a re-opening of its 10Y reference note next week. Size could be $1 billion to $3 billion. As December nears, the reality of Y2K nears as well. Players in the financial markets are primarily focused on year-end liquidity. Tracking fails and recouping any resulting expenses could be a costly and time consuming nightmare, sources say. In fact, backoffice and claims personnel have been asked not to schedule any time off from Dec 27 through Jan 7. Bah, Humbug. But away from Wall Street, other people have very different concerns. Some are stockpiling water and spam. They are ordering life support equipment, medical manuals and water filtration systems. One source told us his mother has gold bars in her attic! In some parts of the United States, gun sales for "home defense type products" are soaring. Hunting gear and sporting equipment sales are not rising although if things get bad, it might make more sense for people to go back to trapping and fishing rather than eating spam for any length of time! Gun dealers also report big demand for windup radios, survival gear and MREs, which stands for "meals ready to eat." One source said "It's not just fanatics either, I got ladies coming into my store." Some say the sale of gun safes is on the rise. The safes, which are the size of a refrigerator, are often bought by people who don't even own guns. They use them to store money and valuables, not trusting banks due to Y2K. On a cheerier note, we hope your Thanksgiving was nice. Because the market will close early today, you can rush home and have some more leftovers. And if you wonder why you are feeling sluggish, remember turkey contains tryptophan, the amino acid that makes you tired. --Gary Rosenberger 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.