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To: tejek who wrote (86286)	8/2/2002 4:06:17 PM
From: TGPTNDR	Respond to of 275872

Ted, Re: <SOX index breaking through a multi year low...> Look at the bright side. It can't go any lower unless they revise the scale. ;-] -tgp

To: tejek who wrote (86286)	8/2/2002 4:47:46 PM
From: Petz	Read Replies (1) \| Respond to of 275872

ted, biz.yahoo.com Treasury Yields Fall on Talk of Rate Cut By Ellen Freilich NEW YORK (Reuters) - Yields on two-year U.S. Treasury notes dived to record lows on Friday after weaker-than-expected U.S. employment data hammered hopes for a U.S. economic recovery and bolstered arguments that the Federal Reserve might have to resume cutting interest rates. Stocks also responded poorly to the news of weak July employment. Major indexes(CBOT:^DJI - News; CBOE:^SPX - News; NasdaqSC:^IXIC - News) fell more than 3.0 percent by mid-afternoon. "The pace of economic activity is much slower than was expected and that calls into question corporate earnings assumptions," said William Sullivan, economist and executive director at Morgan Stanley. "Because the broad equity averages pulled back, that pushed some money back into the fixed-income arena, particularly high-quality issues like Treasuries. As prices of Treasuries rose, yields on two-year notes dropped below 2.0 percent for the first time ever, breaking the previous intraday trough of 2.02 percent and bringing the fall for the last three sessions to a huge 49 basis points. "They're anticipating another rate cut. And as a result, shorter-term maturities seem to be getting the benefit of the money going into the bonds right now," said George de Marcilla, head bond trader at Alaron Trading. "Just hold on tight. As long as the stock market is selling, people will want to be in bonds." Two-year notes (US2YT=RR) were 9/32 higher at 100-17/32, taking their yield to 1.98 percent from 2.13 late Thursday. The five-year note (US5YT=RR) jumped 22/32 to 105-5/32 to yield 3.19 percent against 3.35 percent. The benchmark 10-year (US10YT=RR) leapt 30/32 to 104-21/32, leaving its yield at four-decade lows of 4.28 percent. The 30-year cash bond (US30YT=RR) climbed 1-8/32 to 102-16/32, sending its yield to eight-month lows at 5.21 percent, down from 5.29 percent on Thursday. The September bond future (USU2) jumped 1-14/32 to 107-22/32. U.S. July employment data released on Friday showed U.S. payrolls grew by just 6,000 jobs, well below analysts' forecasts of a still-modest 69,000 new jobs. June payrolls growth was revised upward to 66,000 from 36,000. While the July unemployment rate held steady at 5.9 percent, as expected, the average workweek suffered an unexpected 0.6 percent decline and manufacturing hours plunged 1.0 percent. "These figures were horrific," said Ifty Islam, head of fixed income strategy at Deutsche Bank Securities. "The drop in hours worked was a shocker and might force the Street to revise down its expectations for third-quarter growth." The weak employment report was only the most recent of the soft economic data investors have had to absorb lately. It followed hard upon a 5.7-point plunge in the July manufacturing ISM/NAPM index, reported on Thursday, a drop that Goldman, Sachs & Co. economist Jan Hatzius termed a bad omen. Since 1960, Hatzius said, the ISM/NAPM index has experienced only 13 month-to-month declines of more than 5 points and all but three of those drops came either during or shortly before a recession, as defined by the National Bureau of Economic Research. Hatzius called the July ISM/NAPM survey of the manufacturing sector "shockingly weak," and said it signaled real losses in economic activity, not just a temporary deterioration in the atmosphere. As a consequence of recent weak economic data, Goldman trimmed its economic growth forecast to an annual 2.5 percent rate in the third quarter and 2.0 percent in both the fourth quarter of this year and in the first quarter of 2003. Goldman also predicted the Fed would chop 75 basis points from the 1.75 percent benchmark fed funds rate by year-end. Fed funds are already at 40-year lows after 11 rate cuts last year. Eurodollar futures surged as investors rushed to narrow the odds of an easing, with contracts as distant as December 2003 climbing more than 20 basis points. "That's basically saying that they're expecting the next move by the Fed to be an ease," said Steven Poser, president of Poser Global Market Strategies Inc. "We still have room to go after last year's yield lows," he said, referring to the November closing trough for 10-year yields around 4.19 percent. Other support for the safe-haven bond market came from talk that a European financial institution was in trouble, though traders were unsure what to believe as numerous rumors swept across the market. David Horner, senior economist and fixed-income strategist at Merrill Lynch Government Securities, said it was most improbable the Fed would raise rates in the foreseeable future. He said the big debate is over whether the Federal Reserve will cut interest rates again. "Merrill's official opinion is that the Fed will hang in there and leave rates steady, but it's a close call," he said. Petz