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Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: isopatch who wrote (31417)	7/18/2003 9:27:32 AM
From: isopatch	Respond to of 36161

And it looks more & more like interest rates have bottomed for this cycle. Hard to see how we can have much of an economic recovery with high energy prices AND interest rates moving higher and higher. Iso marketwatch.com <Treasury bear theme continues. Market heading toward worst week since March By Rachel Koning, CBS.MarketWatch.com Last Update: 8:49 AM ET July 18, 2003 CHICAGO (CBS.MW) - U.S. Treasurys began Friday under pressure, on their way to the worst weekly showing since March. The 33 basis point rise in the 10-year yield so far this week is the worst since a 40 basis point jump in the week ended March 21, confirmed analysts with Briefing.com. That week sparked a bond sell-off on troop movement into Iraq after a huge flight-to-safety premium was built into the market in the preceding weeks. A basis point equals 0.01 percentage points. Yields continue to head north on ideas for more robust U.S. economic growth in coming quarters and as Fed Chairman Alan Greenspan this week said the central bank was unlikely to purchase longer-maturity securities as a means to lower interest rates. Expectations for this rare policy step had been a significant driver of 10-year yields to the 45-year lows at 3.07 percent scored in June. The rise in mortgage rates also led to some selling of Treasury securities by mortgage holders who now need less interest flow protection from loan prepayment risk. Financial markets continue to parse U.S. data, not all of which shows the economy taking off with any acceleration quite so soon. Friday's economic calendar is light, with only the University of Michigan's consumer sentiment index expected. But economists suspect the report will show improved consumer attitudes, which in the bond bear market's view will bolster the argument laid out by Greenspan in his Capitol Hill testimony. See Economic Calendar and Forecasts. Checking prices in early action, a benchmark 10-year Treasury note fell 9/32 at 97 9/32. Its yield ($TNX: news, chart, profile) rose to 3.96 percent from 3.92 percent in the previous session. Some analysts said the key 4 percent area was so far proving a tough barrier to sustain, although the benchmark note did briefly cross this mark this week for the first time since April. A 4 percent yield can be attractive for bond fund buyers with longer-term objectives, particularly since some analysts think the recovery will be a slow one for the United States. A 30-year long bond surrendered 9/32 at 106 31/32 to yield 4.91 percent from 4.90 percent at Thursday's U.S. close. Short-term yields have remained basically unchanged, leading to a steeper yield curve that is typically reflective of expectations for stronger economic growth. A 5-year note shed 3/32 at 99 7/32 to yield 2.79 percent from 2.76 percent. A 2-year note was flat at 99 12/32, yielding 1.45 percent and a 6-month bill yield was recently 0.96 percent vs. 0.94 percent in the previous session. Meanwhile, pre-bell stock indicators pointed to modest gains for the broad averages, which added to bond market woes. See Market Snapshot. The dollar firmed against its major trading partners, with dollar/yen recently up 0.4 percent at 119.18 yen and euro/dollar slipping 0.1 percent at $1.1280.>