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Strategies & Market Trends : Galapagos Islands -- Ignore unavailable to you. Want to Upgrade?

To: MulhollandDrive who wrote (40075)	5/19/2003 8:38:06 AM
From: Jorj X Mckie	Read Replies (2) \| Respond to of 57110

dunno, but I suspect a bad feed. Naz futs down 8 and S&P futs down 5.8....No way will the dow futs be unch. nope, -63

To: MulhollandDrive who wrote (40075)	5/19/2003 8:39:13 AM
From: MulhollandDrive	Respond to of 57110

"inflation will fall significantly" what is that called?? U.S. 10-Year Treasuries Advance Following Report Pace of Inflation Slowed New York, May 19 (Bloomberg) -- U.S. Treasuries advanced, with the 10-year note yield extending its biggest two-week drop since 1995, on signs inflation is slowing in the world's biggest economy. Consumer prices dropped in April for the first time since 2001, a report Friday showed. Coming after Federal Reserve policy makers said this month that further erosion of companies' pricing power is ``unwelcome,'' some analysts speculated the central bank will lower borrowing costs as soon as next month. ``We've forecast that inflation will fall significantly in the U.S. this year and next,'' said Daniel Pfaendler, a bond analyst at Dresdner Kleinwort Wasserstein in Frankfurt. ``Low yields on longer-bonds may help keep the housing market strong and make it cheaper for companies to refinance.'' He expects the Fed to cut its 1.25 percent target interest rate by a half-percentage point next month and said the yield on the 10-year note may drop as low as 3.25 percent in coming weeks. The 3 5/8 percent note due in May 2013 rose 1/4, or $2.50 per $1,000 face amount, to 102 at 7:18 a.m. in New York, according to Spear, Leeds & Kellogg. The yield fell 3 basis points to 3.39 percent. A basis point is 0.01 percentage point. The 10-year Treasury note yield -- off which many mortgage and corporate bond rates are set -- fell 50 basis points the past two weeks, the biggest drop since June 1995. The move was fueled by expectations the Fed may cut rates or buy longer-maturity debt to spur economic growth. Ten-year Treasury yields are at the lowest since the 1950's. Treasuries with 10 years left to maturity yielded 2.97 percent in 1958, according to figures from Salomon Brothers Inc. cited in Sidney Homer's ``A History of Interest Rates.'' Slower Inflation ``There is slower inflation, and the U.S. economy is not as strong as the market expects,'' said Motokazu Oyama, who helps run fixed-income investments at Sompo Japan Insurance Inc. Sompo, which has about $46 billion of assets, bought some U.S. notes due in about five and six years in recent weeks, Oyama said. The 1 5/8 percent note due in April 2005 traded at 100 19/32, and its yield fell one basis point to 1.3 percent. The difference between 10-year and two-year yields narrowed to 2.10 percentage points, the smallest gap since November. ``We're heading toward 3 percent'' on the 10-year note yield, said David Plank, a bond strategist at Deutsche Bank AG in Sydney. He said he's recommending buying 10-year Treasury notes as ``the prospect of deflation in the U.S.'' drives yields lower. The Treasuries rally, ignited May 6 when Federal Reserve policy makers expressed concern about the potential for ``an unwelcome substantial fall in inflation,'' got a boost from reports last week showing consumer and producer prices fell in April. Futures The rate on the Eurodollar futures contract for June delivery shed about 3 basis points to 1.19 percent. Eurodollar futures reflect expectations for a benchmark three-month lending rate that has averaged 24 basis points more than the federal funds rate over the last 10 years. ``The possibility of a rate-cut is higher, however short-term bonds are not attractive,'' Sompo's Oyama said. ``Investors will move their funds to longer-term bonds.'' Investors will also focus on testimony by Fed Chairman Alan Greenspan on May 21 before the U.S. Congress's Joint Economic Committee. The central bank must ``guard against'' a rapid decline in prices, Federal Reserve Board Vice Chairman Roger Ferguson said in the text of a speech on Friday in St. Louis. The central bank gives its next interest rates decision on June 25. Last Updated: May 19, 2003 07:33 EDT