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Strategies & Market Trends : January Effect 2003 -- Ignore unavailable to you. Want to Upgrade?

To: RockyBalboa who wrote (432)	5/4/2003 7:28:11 PM
From: RockyBalboa	Read Replies (2) \| Respond to of 666

There's quite a brawl regarding future EUR money market rates going on. More aggressive economists demand rates like in the U.S. which is 1.25% due to the high EUR and the diminishing aggregate demand, including money demand. Others say they shall be leaved at 2.50% thanks to the growing deficits (Germany now predicts 4.0% clearly violating the 3% ceiling again). Personally I would prefer a decisive rate cut to plant some steepness into the yield curve. The flat yield curve offers not enough excess return vs. duration risk while the institutions are drowning in excess short term liquidity and the money market trades below the targeted short term rate. Because of the lack of alternatives, the EUR (and the cable) must be driven up to the implosion point. No one is expecting a rate cut in May, though... so much for a constant exchange rate policy. The +/-25% swings are not acceptable... on another front the Cad has broken out over 70c and there is some gas left.