Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Les H who wrote (36962)	1/7/2000 10:55:00 AM
From: Stephen	Read Replies (1) \| Respond to of 99985

Anyone else think we'll end up negative for the day ??. Look at that trin ... big boys getting out ... Stephen

To: Les H who wrote (36962)	1/7/2000 9:10:00 PM
From: Les H	Respond to of 99985

TALK FROM TRENCHES: RATE DEBATE STILL ON; TERROR TRIPLETS AHEAD By Isobel Kennedy and Rob Ramos NEW YORK (MktNews) - The reaction to the December payroll stats ended up being pretty tame for the U.S. Treasury market Friday. Prices got jostled around a little but are largely unchanged from Thursday's levels. Friday's volatility was nowhere near what has come to be expected on an employment Friday, sources say. The 30Y long bond was down about 3/4 of a point after the figures but normally the bond can move in a 1 1/8 point range after this key report gets released. It seems everyone agrees the Fed will decide to tighten at the February 1-2 meeting. The mystery, of course, is how much. The more constructive players in the market covered their shorts Friday and perhaps set some new longs, even if they are small. They think a 25 bps snugging is a done deal but this move has already been priced into the market. These players see the tone turning more positive. Some technicians say short-term technical indicators look better and monthly stochastics are in deep oversold territory so players should look for a bounce to materialize in Treasuries. Others note that the amount of activity that took place in the first week of January may be a sign that the market is building a base from which to rally. But some strategists are not convinced a turnaround will materialize. They remain skeptical of the market's ability to sustain any gains, anyway. October's rally in long bonds from 6.40% to 6.00% was merely a temporary rebound in an ongoing bear market, one said. The pessimists are staying clear of the market because they think the Fed has much more rate hiking to do. One astute investor said if the Fed does not tighten 50 bps at the next meeting, they will continue to be behind the curve. And, he said, if they don't watch out the dollar is going get whacked and foreigners will pull their money out of the U.S. financial markets. Then there is a group who think the December jobs report increases the likelihood the Fed will move 50 bps in February. And some believe that would finally put the Fed ahead of the curve, making it their last move for some time ahead. Under those circumstances, if funds were hiked 50 bps from the current 5.50% level, there are people who think the 2Y note offers value at its current 6.35%. Enough already. Nothing is going to get settled here on this matter! But it is obvious the economic data going forward is key. And next week we have the pleasure of seeing the "triplets of terror" all in one week. Economists are generally calling for a big rise in December retail sales but are mixed on the inflation figures. Some look for a modest PPI, about +0.1% overall, and a trend CPI, about +0.2%. But several economists are now calling for a +0.3 on overall PPI and CPI, with a core PPI of +0.2 and core CPI of +0.1. Don't forget Mr. Greenspan speaks next Thursday evening on the economy and technology at the N.Y. Economists Club. His speech could do more damage than any number, that's for sure. By the way, he will have the PPI and retail sales numbers under his belt by that time. CPI comes out the following day. <<<markets could pull back before PPI/CPI then shoot up <<<again on Friday and following week especially if <<<Greenspan speaks glowingly about technology again. In other matters, sources say the year 2000 has caused investors to finally do some re-evaluating of their investment strategies. And it looks like some are opting to move back to the dull. Thursday's price action shows players fleeing from the hyped-up Nasdaq stocks, putting the proceeds into the relatively safer blue chips stocks and treasury bonds. It has also become apparent that players around the world are buying U.S. agencies more and more. Sources say the increased size of agency issuance has made them more liquid vehicles to invest in. Of course, the growing liquidity only enhances the already attractive pick up in yield to maturity over U.S. Treasuries, they say. That's good because they will have more of them to buy next week. FNMA will sell a $4 billion 2Y benchmarks next week along with a least $4 billion in new 10Y notes. Supply in the rest of the fixed income markets is bulging at the seams and it is heavily weighted in the 10Y sector. Here is a list of deals on tap for next week: $6B U.S. Treasury 10Y "TIPS"; $2B GMAC 10Y; $2.5B Daimler-Chrysler, possibly in 5Y + 10Y; $3B World Bank 10Y; $1B Turkey 10Y or 30Y. Something for everyone is this list, eh! The prospects of all this supply, pressure from rate lock selling and a large amount of flattening trades caused the 10Y U.S. Treasury issue to cheapen dramatically this week. Some analysts had been calling for a 10Y/30Y inversion due to this and it certainly is still a possibility. But some decent buying of the 10Y on Friday widened the spread back out a touch. Here's an interesting thought about the technology sector. Moody's considers that "an unknown, but considerable, number of new jobs have been formed at Internet/high technology companies that have no earnings. These shareholder-owned corporations ought not to be confused with nonprofit organizations. Either returns from equity investment in Internet/high technology companies are deemed sufficient, or jobs at still unprofitable companies from this industrial complex will be lost." Lastly, 18 out of 23 analysts polled in a MNI survey are calling for the Bank of England to raise rates at next week's meeting. It's been a rough start to the New Year. Use the weekend to gather your strength for Greenspan and The Triplets of Terror! 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.