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To: Les H who wrote (4708)	1/10/2003 3:41:56 PM
From: pallmer	Read Replies (1) \| Respond to of 29600

-- TABLE-Wall St sees Fed on hold in Jan, most of year -- NEW YORK, Jan 10 (Reuters) - Wall Street dealers haven't changed their expectations the Fed will keep borrowing costs steady for most of this year despite a bleak employment report released earlier on Friday. A Reuters survey of 20 of the 22 primary dealers who trade with the Fed found none expects a rate cut at the Fed's next meeting on Jan 28-29. With factors like a possible U.S.-led war with Iraq hanging over the world economy, a majority still reckon that by mid-year, official rates will remain at four-decade lows of 1.25 percent. Indeed, most analysts reckon that if rates change, they are likely to head lower and not higher. That is despite the release on Friday of a gloomy employment report that showed the labor market shed 101,000 jobs in December and lost more than previously reported in both October and November. But four dealers believe evidence of economic weakness will pile up by the Fed's March meeting and trigger a rate cut then. The number is unchanged from the previous survey on Dec. 10. Here is a summary of the interest rate forecasts by 20 of the 22 primary dealers that trade directly with the Fed in open market operations. Two of the dealers, Goldman Sachs and Salomon Smith Barney, were not immediately available to participate in the survey. -- None of the 20 dealers expect rates to change at the Fed's next meeting on Jan 28-29. -- But that unanimity surrounding rates holding steady erodes as time goes on. Four expect a rate cut at the Fed's March 18 meeting, while at the other end of the spectrum, another 2 expect rates to be higher by the end of June. -- By year-end, a majority, or 13 dealers, expects rates to be higher than the current 1.25 percent. Four see rates unchanged at that time, and three see lower rates. Here is a breakdown of the Jan. 10 survey: Fed Fed Funds Funds Action Action Rate Rate Company Jan 29 Mar 18 June 03 Year End ABN AMRO Inc No Move No Move 1.25 1.75 Banc of America Sec No Move No Move 1.25 1.75 Banc One Capital No Move No Move 1.25 2.25 Barclays Capital No Move No Move 1.25 2.00 Bear, Stearns & Co No Move No Move 1.50 2.50 BNP Paribas Corp. No Move No Move 1.25 1.25 CIBC World Markets No Move Cut 25 0.75 0.75 CSFB No Move No Move 1.25 1.25 Daiwa Securities America No Move No Move 1.25 1.25 Deutsche Bank Securities No Move No Move 1.50 2.25 Dresdner Kleinwort No Move Cut 50 0.75 0.75 Goldman, Sachs * -- -- -- -- HSBC Securities (USA) No Move Cut 25 0.75 0.75 J.P. Morgan Securities No Move No Move 1.25 2.00 Lehman Brothers No Move Cut 25 1.00 1.50 Merrill Lynch Govt Sec No Move No Move 1.25 1.25 Mizuho Securities USA No Move No Move 1.25 2.50 Morgan Stanley No Move No Move 1.25 2.50 Nomura Securities Intl No Move No Move 1.25 2.00 RBS Greenwich Capital No Move No Move 1.25 2.00 Salomon Smith Barney -- -- -- -- UBS Warburg * No Move No Move 1.25 2.50 * Not immediately available to take part in poll. ((Poll conducted by Victoria Thieberger, Ross Finley, Wayne Cole, Ellen Freilich, Aleksandrs Rozens, Dan Wilchins)) Here is a breakdown of previous survey taken on Dec 10: Funds Qtr/Yr Fed Fed Rate First Action Action June Rate Company Jan 29 Mar 18 2003 Hike ------------------------------------------------------------- ABN AMRO Inc No Move No Move 1.25 Q303 Banc of America Sec No Move No Move 1.25 Q303 Banc One Capital No Move No Move 1.25 Q303 Barclays Capital No Move No Move 1.25 Q303 Bear, Stearns & Co No Move No Move 1.50 Q203 BNP Paribas Corp. No Move No Move 1.25 2004 CIBC World Markets No Move Cut 25 1.00 2004 CSFB No Move No Move 1.25 -- Daiwa Securities No Move No Move 1.25 Q403 Deutsche Bank No Move No Move 1.25 Q303 Dresdner Kleinwort No Move Cut 50 0.75 2004 Goldman, Sachs No Move -- 1.00 Q403 HSBC Securities No Move Cut 25 0.75 2004 J.P. Morgan No Move No Move 1.25 Q303 Lehman Brothers No Move Cut 25 1.00 Q303 Merrill Lynch No Move No Move 1.25 2004 Mizuho Securities No Move No Move -- Q303 Morgan Stanley No Move No Move 1.25 Q303 Nomura Securities No Move No Move 1.25 Q403 RBS Greenwich Cap No Move -- 1.25 Q303 Salomon Smith Barney No Move No Move 1.25 Q403 UBS Warburg No Move No Move 1.25 -- ------------------------------------------------------------- (( - U.S. Financial Markets 646 223 6300 - )) (C) Reuters 2003. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world. nNAT001004 FED/R 10-Jan-2003 20:38:27 GMT Source RTRS - Reuters News