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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Justa Werkenstiff who wrote (14468)	6/15/2000 11:50:00 AM
From: Wally Mastroly	Read Replies (1) \| Respond to of 15132

U.S. Treasuries trim losses after Philly Fed slide/with Fed rubber chicken resuming later<G> By Ellen Freilich NEW YORK, June 15 (Reuters) - U.S. Treasuries slid on Thursday as investors took profits on recent gains, but the market shaved some losses after seeing a sharp slide in a regional economic activity index. Prices opened lower after Federal Reserve Bank of Richmond President Alfred Broaddus said there was still a need for U.S. short-term interest rates to rise despite signs that U.S. economic growth was beginning to slow. And Treasuries remained under pressure after the Fed reported that U.S. industrial production rose 0.4 percent in May, boosted by higher utility output. While the number was stronger than the 0.3 percent decline economists, on average, had expected, the data still showed a deceleration in manufacturing activity. ``The report showed a little more strength than expected, especially in utilities, but manufacturing is cooling off,'' said Gary Thayer, chief economist at A.G. Edwards & Sons. Thayer noted that manufacturing output rose 0.8 percent in March, 0.6 percent in April, and just 0.3 percent in May. ``We are seeing a moderating, or slowing, in manufacturing activity,'' he said. ``It's not an outright decline, but it suggests some cooling in the economy.'' Thayer said utility output has boosted the total industrial production number in the last couple of months. Higher utility output is usually due to weather-related factors, rather than the economic fundamentals, he said. The market shaved a few of its losses after the Federal Reserve Bank of Phildelphia's more recent, June survey of manufacturing in the U.S. mid-Atlantic region showed a sharp drop in activity. The Philadelaphia Fed's Business Outlook Survey main index of business activity fell to a lower-than-expected 1.7 in June from 20.2 in May, the lowest reading in a year and a half. Economists polled by Reuters had forecast a reading of 14.2 in a Reuters survey. The prices paid index derived from the Philadelphia Fed's Business Outlook Survey, closely watched as a measure of inflation, fell slightly to 30.8 in June from 31.4 in June. But the bond-friendly nature of the overall survey was constrained a bit by a rise in its prices received item to 10.5 from 7.7. Analysts tied the market's losses mainly to profit taking after the market's steady climb since the Labour Department released a surprisingly weak May employment report on June 2. That report, along with the May National Association of Purchasing Management survey, was the start of a string of soft data that led the financial markets to believe that the Fed will hold rates steady at its June 27-28 policy meeting. At 11:00 a.m. (1500 GMT) the 10-year note was down 1/32 to 103-6/32, yielding 6.06 percent. The 30-year bond was down 9/32 to 104-15, yielding 5.93 percent, and the two-year note was down 1/32 to 100-10/32, yielding 6.43 percent. Short-term bill rates were firmer. New jobless claims for the week ended June 10 fell - as economists had expected them to - to 296,000 from a revised 312,000 a week earlier. Meanwhile, New York Mercantile Exchange July crude futures were down $0.05 to at $32.80. ``Certainly oil prices are something that the market is watching,'' said Blumenthal. ``If higher oil prices seeped through to inflation in other areas of the economy, that would be a worry for the market because it would make it more likely that the Fed would tighten -- especially since Fed speakers are still saying they're concerned about inflation.'' The market will listen carefully to any remarks by Fed Bank of Chicago President Michael Moskow on the economy and interest rates. Moskow is scheduled to speak at the Federal Reserve Bank of Chicago Economic Forum at 12:45 p.m. (1645 GMT) in Grand Rapids, Mich.