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To: Defrocked who wrote (7387)	7/31/2000 3:12:10 PM
From: John Pitera	Respond to of 436258

12:41 ET 30-year: -4/32..5.792%....GNMAs: -1/32....$-¥: 109.57 Fed outlook: Despite 2nd quarter GDP growth which exceeded strong first quarter growth, a two month surge in durable goods orders of 18% and consumer confidence nearing the record high the market is pricing the odds of an August Fed tightening at just 2 in 5. That is, the September funds futures contract is priced with 40% odds for a 25 bp tightening at the next FOMC meeting on August 22. We remain in the "on-hold" camp as well seeing some deceptive growth in the recent indicators just as the strength of the consumer spending slowdown was deceptive a few months ago. The Fed's tightening has yet to be fully reflected in the economy as current policy rates stand near decade highs. Moreover, productivity growth and the price figures argue that inflation remains fairly benign outside of oil prices. Friday's employment report provides the most crucial information before the meeting 3 weeks away which may also alter the longer term outlook which reflects another 25 bp move by December.