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To: Softechie who wrote (5547)	2/7/2003 9:42:09 AM
From: pallmer	Read Replies (1) \| Respond to of 29601

-- Fed funds futures show reduced chance of rate cut -- By Kyle Peterson CHICAGO, Feb 7 (Reuters) - Federal fund futures slipped on Friday at the Chicago Board of Trade, suggesting a diminished chance of a Federal Reserve interest rate cut after the release of a much stronger-than-expected U.S. jobs report. The Labor Department reported that U.S. payrolls added 143,000 nonfarm jobs in January, compared with December's loss of 156,000 jobs. The jobless rate, meanwhile, declined unexpectedly to 5.7 percent from 6.0 percent in December. While the data were stronger than most analysts forecast, traders kept their gaze on the growing geopolitical tensions that are creating demand for safe haven debt. Those tensions are just strong enough to keep the chance of additional Fed easing factored into market prices for the foreseeable future, analysts said. "I don't think people are going to want to stay too short ahead of a possible war," said Joe Giagrande, bond trader at Gelber Group. "Apparently this hasn't changed Fed expectations that much." Fed funds futures are used by some analysts to gauge future Fed rate moves. The jobs data triggered a mild sell-off in the futures. At 8 a.m. CST (1400 GMT), March Fed funds <FFH3> were down 5 basis points. Based on the March Fed funds contract, Giagrande calculated a 20 percent chance for a 25-basis-point rate cut at the March Fed policy meeting. That is down from a 25 percent chance seen prior to the data release, he said. The central bank's target for the overnight lending rate between banks has been at a 40-year low of 1.25 percent since November. Other analysts noted a nearly unchanged interest rate outlook for the first half of 2003 after the jobs report. "It was strong, but there's so many concerns in the market," said Joe Shatz, futures and options strategist at Merrill Lynch. "Yesterday the total probability of an ease by the June meeting was 44 percent. Today it's 36 percent. So the changes are not significant." Stock index futures gained after the jobs report. Standard & Poor's 500 index futures <SPH3> were up 0.64 percent. Nasdaq 100 index futures <NDH3> were up 0.92 percents. ((Reporting by Kyle Peterson; kyle.peterson@reuters.com; Reuters Messaging: kyle.peterson.reuters.com@reuters.net; 312-408-8750)) (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. nN07299811 07-Feb-2003 14:40:03 GMT Source RTRS