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To: pallmer who wrote (4998)	1/21/2003 5:27:05 PM
From: pallmer	Read Replies (1) \| Respond to of 29603

-- Treasuries climb as stock slide spurs safety bid -- By Ellen Freilich NEW YORK, Jan 21 (Reuters) - Treasuries rose on Tuesday as another stock market slide and worries about war whetted investors' appetite for safe-haven government debt. Trade was choppy, with prices first falling after U.S. housing data proved far stronger than anyone expected and traders sold Treasuries to hedge a $5.0 billion 10-year note issue from General Electric Co.<GE.N> But bonds recovered as stocks <.DJI><.IXIC> erased an early rally, skidding lower, and President George W. Bush said he had concluded Iraq was not disarming as required by the United Nations and Deputy Secretary of State Richard Armitage said alternatives to the use of force were nearly exhausted. Figures on U.S. housing starts surprised even the most bullish forecaster with a 5.0 percent jump to 1.835 million in December, compared with analysts' forecasts of a fall to 1.678 million from 1.747 million the month before. The market's negative reaction to the data was constrained, however. The housing sector, thanks largely to the Federal Reserve's accommodative monetary policy, has been a steady driver of economic activity, even through recession. In addition, the housing numbers stood in marked contrast to recent data on other parts of the economy. Traders noted one U.S. investment bank was telling clients the recent data might have been poor enough to prompt the Federal Reserve to change its implicit policy bias to recognize increased risks to the economy when it meets next week. News of GE's $5.0 billion sale, the largest single corporate issue so far this year, weighed on Treasuries early in the session as dealers sold Treasuries as a hedge for the paper. The market has been flooded with new supply this month as corporations have rushed to borrow while rates are low and before the uncertainty over Iraq turns into actual conflict. IBM, for instance, said on Tuesday it intended to sell up to $20 billion in debt and stock this year. For now, investors' preference for safety and slow economic growth will support U.S. Treasuries, analysts said. Jim Kauffmann, portfolio manager of the ING Intermediate Bond Fund, said stimulative monetary and fiscal policy and a weaker dollar argued for a stronger economy later this year. "But (that's) a second-half story," he said. For the first half of the year, "we're looking for sub-par growth ... of 2.0 percent to 2.5 percent." At 5 p.m. (2200 GMT), two-year notes <US2YT=RR> edged up 2/32 in price for a yield of 1.64 percent from 1.69 percent late last Friday. Five-year notes <US5YT=RR> added 8/32, giving a yield of 2.92 percent from 2.98 percent. Benchmark 10-year notes <US10YT=RR> added 11/32 in price, taking yields to 3.97 percent from 4.02 percent. The 30-year bond <US30YT=RR> advanced 14/32 to 107-9/32, yielding 4.90 percent, versus 4.92 percent at Friday's close. (Reporting by Ellen Freilich, Wayne Cole, editing by Dan Grebler; Reuters Messaging: ellen.freilich.reuters.com@reuters.net; 646-223-6309) (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. nN21614280 US/ US/N Symbols: US;GE US;COMP US&DJI 21-Jan-2003 22:25:48 GMT Source RTRS - Reuters News