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

To: Justa Werkenstiff who wrote (323)	7/17/2000 4:01:24 PM
From: Wally Mastroly	Read Replies (1) \| Respond to of 10065

Batman says what higher prices?...All new highs by the end of the year: cbs.marketwatch.com

To: Justa Werkenstiff who wrote (323)	7/17/2000 8:02:08 PM
From: Justa Werkenstiff	Read Replies (2) \| Respond to of 10065

U.S. Treasuries slump on revived Fed rate fears By Andrew Priest NEW YORK, July 17 (Reuters) - U.S. Treasuries slumped for the second consecutive session on Monday, with prices eroded by a growing belief among investors that the Federal Reserve may press on with hiking interest rates when it meets in August. "We definitely got some liquidation of long positions after Friday's sell-off as people focused on the possibility of the Fed raising rates again in August," said David Ging, Treasuries strategist at Donaldson, Lufkin & Jenrette. At the close, 10-year notes <US10YT=RR> were down 12/32 to 102-15/32, yielding 6.15 percent. Thirty-year bonds <US30YT=RR> were down 15/32 to 104-20/32, yielding 5.92 percent, after falling nearly a full point on Friday. Five-year notes were down 8/32 to 101-25/32, yielding 6.31 percent. And two-year notes <US2YT=RR> were down 4/32 to 99-26/32, yielding 6.47 percent. Prices stumbled from the start of the New York session, with the cash market weighed down by futures prices which once again broke through key technical support levels. The September long-bond futures price <USU0> closed off its session lows, 21/32 lower at 96-28. A stream of economic data since the end of May -- ranging from housing and manufacturing to employment trends -- had raised hopes that the need was diminishing for much higher interest rates to stem the red-hot economic pace seen late last year and early in 2000. On the back of this evidence of slowing, Fed policymakers left rates steady when they last met in late June. But government securities slid after Friday's stronger-than-expected June retail sales data -- with upward revisions to April and May sales -- made consumer spending look more robust than previously thought. Market prices now point to a growing sense among market players that central bankers may tighten credit further at their next meeting on Aug. 22. "Before the retail sales report, we weren't even seriously entertaining the possibility that the Fed would raise rates in August; we'd been lulled by the string of weaker economic data," said Chris Rupkey, vice president and economic at Bank of Tokyo/Mitsubishi. The outlook for stronger second-quarter growth numbers and for a greater chance of another Fed rate tightening in August has caused the market to skid, Rupkey said. "We had a lousy close on Friday, and Monday continued down from there as the market adjusted to the idea that the Fed might raise rates again in August," he said. BUSINESS INVENTORIES U.S. business inventory data, which rarely move prices, contributed to the downward momentum, traders said. The government reported that inventories rose a stronger than expected 0.8 percent in May after a 0.5 percent increase in April, the quickest pace in six months. Inventory gains can indicate either a weakening in demand that leaves goods to pile up on producers' shelves, or stockpiling by businesses that are anticipating better sales ahead. Most of the inventory increase occurred at the retail level, where the value of goods jumped 1.4 percent in May after a 0.3 percent rise in April. Rupkey said inventories probably added one percentage point to (second-quarter) GDP growth. With consumer spending responsible for about 3.5 percent of GDP growth, "you're in the mid-four percent range for next Friday's (July 28) GDP report and that's too fast for the Fed," he said. INFLATION DATA KEY, NOT GREENSPAN The market was jittery ahead of the June Consumer Price Index (CPI) report due on Tuesday and Fed Chairman Alan Greenspan's Congressional testimony on the economy, set for Thursday. Economists polled by Reuters estimated, on average, that the CPI rose 0.4 percent overall in June and 0.2 percent when food and energy prices were excluded. David Connors, head of governments trading at Credit Suisse First Boston, said the market was more likely to be reassured by further signs of an economic slowdown than by Fedspeak in coming weeks. "We don't think we're likely to get any reassurance from Fed officials in coming weeks, specifically from Greenspan," he said. In its weekly bill sale, Treasury sold $16 billion of three- and six-month paper. The three-month bills were awarded at a high rate of 5.960 percent while the six-month bills were sold at a higher rate of 6.015 percent. 18:32 07-17-00