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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Stoctrash who wrote (6089)	5/14/2002 2:40:05 AM
From: John Pitera	Respond to of 33421

I would not mind working for Bill Gross. :-) he's a very smart guy. a few bond tidbits: ------- ---- Corporate Recap: Spreads in the high grade market were largely unchanged on Friday, though there were a few sectors to get moving a bit, so we have a couple of things to talk about.. The Telecom sector was weaker on the session by about 5 bp. Utilities and Cable/Medias were in by between 1 and 2 bp, while Banks and Finance names were in by 3-4 bp. Swap spreads were unchanged... ---- A primary dealer out with comments suggesting a 5/30 steepener (holding a long position in 5s while short 30s in a bet that the 5/30 spread will steepen). They cite that this trade will maintain a bullish outlook on the market while taking into account inflationary pressures. Inflation you ask? They highlight the weaker dollar and higher commodity prices for this. 5/30 spread at 116 bp this morning. Of note, while inflation is currently at bay according to many on the street (at least those that we talk to), the forward looking eye on price pressures can be seen in the outperformance of TIPS versus nominals of late, with the spread between the 10-yr issues holding above their recent wides of 200 bp at 205 bp (170 bp at the beginning of March). -------- USD can rally until shorts get shaken ----Dollar showing some signs of improvement this morning with the firmer tone in US equity futures. Still some scope for a bounce in the dollar on the back of a large speculative net short position. Of interest, specs are now long the yen for the second week in a row. Not to be outdone, specs have amassed record long positions in the euro, while bullishness towards the Swiss franc is at its highest level in six months. The Mexican peso may be somewhat oversold as well, as specs have gone net short for the first time since September of last year. ------ Recent strength in the euro has largely been a function of dollar weakness. In other words, the single currency has been unable to rally on its own merit given concerns about labor strikes, fiscal rigidity and of course, weakness in final demand. Of interest, the latter is particularly worrisome when considering the need for Europe to pick up some of the slack surrounding the bursting of the new economy bubble here at home. However, just this morning, we learned that German retail sales fell 4.5% year on year in March after a 3.1% decline in February ------ .Gold getting hit by a modest bounce in the dollar and a rally in US equities. Cash gold down $1.50 at $309.50 an ounce. Gold still has plenty of underlying support from quality of recovery concerns, particularly when considering thoughts surrounding a structural correction in the dollar.