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To: Jim Willie CB who wrote (36458)	4/28/2001 11:19:01 PM
From: stockman_scott	Read Replies (1) \| Respond to of 65232

G7: Slowing World Economy Remains Sound Saturday April 28, 9:13 pm Eastern Time By Alister Bull <<WASHINGTON (Reuters) - The leaders of the world economy on Saturday delivered an upbeat assessment for global growth that shrugged off the threat of a U.S. slowdown and said that they would stop telling each other what to do. ``Although global growth has slowed over the past year, the foundations for economic expansion are sound,'' said a joint statement issued after a meeting of finance leaders from the Group of Seven industrial nations. ``In fact, the prospects for improving the world standard of living are compelling.'' U.S. Treasury Secretary Paul O'Neill said at a briefing following the meeting that ``there was a sense of real optimism'' on global growth among participants. The statement from the ministers and central bankers from the Group of Seven countries -- the United States, Britain, Canada, France, Germany, Italy and Japan -- was carefully crafted to shore up confidence that a slowing global economy would not slide into recession. According to forecasts made this week by the International Monetary Fund, the global economy will grow by 3.2 percent this year after an almost 5.0 percent expansion last year. NO PRESSURE ON THE ECB O'Neill said that he had not raised the issue of interest rates in the euro common currency zone and European Central Bank President Wim Duisenberg said separately that there had been no pressure on the bank to ease interest rates. The ECB had been under fire for refusing to follow other G7 authorities in cutting interest rates this year. The IMF was among those leaning on the ECB to ease policy, saying the central bank should help shelter slowing world growth. Duisenberg said that the ECB's explanations had been received loud and clear, adding that its caution had been justified by the risks of inflation, which now looked likely to remain above its target range for the entire year. ``We understand that different countries will approach these policies...in different ways. We respect these differences and it is not our intent to give direction to each other,'' Duisenberg said. He said the ECB now expected inflation to remain above the upper range of its zero-to-two percent price tolerance range until early next year, indicating that its scope to cut interest rates this year was looking slim. High energy prices were among factors pushing eurozone inflation to 2.6 percent in February and March and the G7 communique made direct reference to a renewed advance in the price of crude oil. ``We recognize that lower energy prices and stable oil markets are important,'' the statement said. Crude oil has risen back above $25 per barrel and closed on Friday at $27.80 a barrel. U.S. FUNDAMENTALS SOUND The finance leaders also said fundamentals of the slowing U.S. economy, the engine of global growth in recent years, were sound. ``In the United States, growth has slowed sharply. However, long-term economic fundamentals...remain strong.'' The statement indicated that the United States, Europe and Japan remain content to give each other space to fix their own problems, saying they would each work to make their economies grow closer to their potential. U.S. monetary policy should continue to bolster growth in the world's richest economy and maintain price stability, the statement said, adding that U.S. fiscal policy should target boosting long-term fundamentals. The U.S. Federal Reserve has slashed interest rates by 2 percentage points since the beginning of the year to underpin flagging growth. Congress is considering a tax cut, but the shape and scope of it are the subjects of heated debate. Without touching on European monetary policy, the statement said that Europe should stimulate growth by implementing structural reforms. Those reforms would include changes to unemployment benefits and tax policies to provide greater incentives for work. In most of Europe, labor market policies are believed to conspire to keep unemployment rates higher than would otherwise be the case. On Japan, the ministers said the Bank of Japan should provide enough liquidity to prevent deflation. It added that vigorous financial and corporate sector reforms were needed for a sustainable recovery in the moribund Japanese economy. Although Washington has publicly called on Europe -- as well as Japan -- to find ways to speed up growth, the expansion of the 12-nation eurozone economy is expected to outpace that of the other economic heavyweights, including the United States, this year. JAPAN STRUGGLING According to forecasts released this week by the IMF, the U.S. economy looks set to slow to 1.5 percent growth this year, while Europe is expected to slow to a 2.4 percent expansion. Japan, whose economy has been struggling for a decade, is expected to slow to a sluggish 0.6 percent. The communique said that both Britain and Canada should continue to support economic growth and job creation, while meeting their inflation targets. Ministers welcomed the new economic plan by the Turkish government, which is aimed at digging that nation out of a crippling financial crisis. The IMF and World Bank are near agreement on providing Turkey with $10 billion in emergency loans, something the G7 said it supported. Using standard language, the communique also said that currencies should be in line with economic fundamentals -- meaning there was no change in the G7 stance on foreign exchange.>>

To: Jim Willie CB who wrote (36458)	5/1/2001 1:20:37 PM
From: stockman_scott	Respond to of 65232

Treasuries Jump on Small Gain in NAPM Tuesday May 1, 12:52 pm Eastern Time By Eric Burroughs <<NEW YORK (Reuters) - U.S. Treasuries rose on Tuesday after a report showed the struggling manufacturing sector was stabilizing but still mired in a nine month recession, supporting expectations for more Federal Reserve interest rate cuts later this month. The National Association of Purchasing Management (NAPM) said its monthly gauge of industrial activity rose to 43.2 in April from 43.1 in March, but below expectations for 43.8. Any reading below 50 indicates contracting growth. It was the third straight month the ailing U.S. manufacturing activity improved, providing some evidence of stabilization in that sector. But the small gains in the NAPM suggested that the Fed still has plenty of room to cut rates, analysts said, even after a surprising acceleration in economic growth during the first three months of the year had dampened hopes for more deep rate cuts. Market players had feared the NAPM report could show a much bigger increased after the jump in economic activity seen in first quarter gross domestic product (GDP). ``While it does show is that perhaps we've reached a bottom in manufacturing, obviously there's still long way to go before the nation's factories get up and running at full strength,'' said Kevin Flanagan, fixed-income strategist at Morgan Stanley. ``It's going to take time, and the (bond) market is probably relieved to some extent because it's a figure that failed to show any new momentum.'' The government said on Friday that GDP, which measures all economic activity in the country, rose at a 2.0 percent annual pace in the first quarter, much higher than expected and double the pace from the fourth quarter last year. Bond investors see the pickup in economic growth as reducing the need for more aggressive Federal Reserve interest rate cuts as well as possibly portending future inflation pressures later in the year -- both negative for bonds. The Fed has shaved 2.00 percentage points from its overnight bank lending rate to 4.5 percent to make credit more easily available and give beleaguered economic growth a shot in the arm. The Fed's next policy meeting is in two weeks on May 15. ``The Fed is going to continue to ease,'' said John Canavan, Treasury market strategist at Stone & McCarthy Research Associates in Princeton, N.J. According to futures contracts on the federal funds rate, the market fully expects the central bank to cut rates by at least another 25 basis points -- a quarter of a percentage point -- at the next meeting. But the odds that the market places on an additional 25 basis points of easing have fluctuated, with many investors looking to a key employment report on Friday for a clearer signal. The Fed's four previous rate cuts this year have each been by 50 basis points, or half a percentage point. Two-year notes (US2YT-RR) rose 4/32 to 99-17/32, pushing their yield, which moves opposite to price, down to 4.24 percent at 12:30 p.m. (1630 GMT). Five-year notes (US5YT-RR) rose 6/32 to 103-21/32, yielding 4.84 percent. Benchmark 10-year notes (US10YT-RR) rose 15/32 to 97-29/32, yielding 5.27 percent. Thirty-year bonds (US30YT-RR) rose 29/32 to 95-3/32, yielding 5.72 percent. Treasuries shrugged off a Commerce Department report that said U.S. construction spending rose 1.3 percent in March, led by increases in non-residential building activity, much higher than the 0.3 percent gain consensus forecast. It was the fifth straight month construction spending has increased. Throughout the day, automakers will report their results in April. Solid auto sales so far this year have helped alleviate the inventory buildup among manufacturers and have helped the economy weather the downturn in overall activity.>>