Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Mike M2 who wrote (181230)	7/18/2002 9:20:55 PM
From: Haim R. Branisteanu	Respond to of 436258

Weaker Philly Fed Data A Cause For Concern The Philadelphia Fed reported around noon Thursday that its index of factory business activity moved to 6.6 in July after having surged to 22.2 in June from 9.1 in May. Negative readings signal a contraction in activity, while positive ones denote growth. Economists had expected a further expansion of factory activity in the Philadelphia region, although at a slower pace versus June. The Philadelphia Fed's new orders index for July also showed cooling growth, falling to 6.6 after coming in at 20.1 for June. Employment, which has been decidedly soft at the national level, was also tepid in the Mid-Atlantic, with that index retreating further to -6.8 in July versus -2 in June. Price pressures continued to grow in July, albeit at a less strong pace. The prices paid index ebbed to 17.9 for the month versus 22.9 in June. Meanwhile, the prices received index moved to 1.0 after posting an 8.7 reading in June. SunAmerica's Cheah said the slowdown of the Philly Fed report is "the second shoe to drop" following a weaker-than-expected consumer sentiment report Friday from University of Michigan. And Thursday afternoon's rally in the Treasury market reflected "a real chance that the optimism is ebbing away very fast" as U.S. consumers and businesses become discouraged by the state of the economy. Some economists, however, weren't ready to take the latest Philly Fed report at its face value. Steve Stanley, economist at Greenwich Capital Markets in Greenwich, Conn., said the falling Philadelphia Fed index is somewhat dubious, and it's premature to assume based on these data that the manufacturing sector is losing steam because of possible distortions such as irregularities caused by summer vacations. "This report is cause for concern but not sufficient by itself to dramatically alter our big picture view unless it is confirmed by national and more reliable data," he said in a commentary Thursday. Trading activity Thursday was on the light side, a factor that made some participants cautious of reading too much into the rally late in the session. Total volume, according to IFR Bonddata, was 80% of an average session. "When you don't have real activity, a directional movement doesn't mean a lot," said Jefferey Meyerson, vice president of trading at M.H. Meyerson & Co. in Jersey City, N.J. Other economic indicators, released earlier in the Thursday session, had little impact on the Treasury market. The Dow Jones-Bank of Tokyo-Mitsubishi weekly business barometer rose by 0.5% in the week ended July 6, led by a sharp rebound in mortgage applications for home purchases. The rise in the barometer more than reverses a 0.2% decline in the previous week, and is the fourth-largest increase in five weeks. A statistically smoothed version of the index rose by 0.1% in the latest week. This index adjusts for week-to-week volatility and also puts the latest increase as the sixth in succession since a 0.1% decline posted in the week ended May 25. Separately, the Labor Department said initial jobless claims decreased by a larger-than-expected 28,000 to 379,000 in the week that ended July 13, marking the lowest level since the week of Feb. 17, 2001. Economists had expected a decline of just 13,000 initial claims. A Labor Department statistician cautioned, however, that initial-claims numbers tend to fluctuate greatly at this time of year. Later, the Conference Board reported that its index of leading economic indicators was unchanged at 112.4 in June versus a revised 0.6% gain in May. Economists had expected the index to remain flat, citing the negative influence of equity markets. Supply will also start to be more closely watched, with Treasury's $27 billion, two-year, note auction scheduled for July 24, its quarterly refunding to be announced on July 31, and the promise that some non-government deals could come out of the woodwork in the weeks to come. On Friday, the market will receive more data, including June consumer price index, which is expected to remain restrained in June, and the May international trade deficit, which is seen to remain near the widened level it reached in April. COUPON ISSUE PRICE CHANGE YIELD 2 7/8% 2-year 100 23/32 Up 6/32 2.50% 4 3/8% 5-year 102 24/32 Up 14/32 3.75% 4 7/8% 10-year 102 24/32 Up 17/32 4.60% 5 3/8% 30-year 99 18/32 Up 21/32 5.40% 2-30-Yr Yield Spread: 290 BPS Vs 283 BPS Source: BrokerTec Global -Joy C. Shaw, Dow Jones Newswires; 201-938-2137; joy.shaw@dowjones.com