To: John Pitera who wrote (1476 ) 5/2/2000 4:08:00 PM From: John Pitera Respond to
good comments from today's Briefing.com.. do we have anDespite all the talk of a 50 bp rate hike, the front end continues to perform well, as we would argue that while the market may be "talking the talk," it is unlikely to "walk the walk" when it comes to pricing a more aggressive tightening at the front end. Of interest, we would note the recent improvement in some of the intereest rate sensitive currencies that have been on the decline as of late, such as the Australian and Canadian dollars. strength in the dollar has been attributed to the performance of US equities (as well as some talk that Soros is restructuring some of his funds), thoughts of a slowdown in the global economy are starting to get a bit of play. One of our sources has reminded us over the last few days that global liquidity is tightening, a dynamic that could have some fairly negative implications for equities and consumption. Such thoughts may eventually provide some support Tsy Sec Summers? argument that things would be better if growth was geared up to match the US, rather than having the Fed try and close the gap by slowing down the US economy. aggressive 50 bp rate hike, we are reminded of the Fed?s awesome responsibility in the global economy. While Greenspan & company have sought to distance the Fed from this role, it simply cannot be ignored when considering how dependent the rest of the world is on the US not only as a consumer/importer, but also as a leader in market trends. For our part, we would note that it may be time to start paying attention to what is going on in the currency market , as thoughts of a more successful Fed seem to have been the impetus for a recent push lower on the part of a number of emerging market currencies.
