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To: yard_man who wrote (7008)	2/5/2004 2:33:59 PM
From: mishedlo	Read Replies (1) \| Respond to of 110194

-- DJ IMF: ECB Must Be Set To Cut Rates On Euro Strength-Report -- ROME (Dow Jones)--Euro-zone interest rates are "appropriate" but the European Central Bank should stand ready to cut rates if the euro continues to strengthen, the International Monetary Fund will say at a G7 meeting Friday, Italian news agency Ansa reported Thursday. The IMF will say at the meeting in Boca Raton, Fla., that the ECB "should be ready to relax monetary policy further if the euro's continued strength threatens the (ECB's) inflation target," Ansa said, citing a draft copy of the IMF's latest world growth forecasts to be presented at the meeting in Florida.

To: yard_man who wrote (7008)	2/5/2004 2:43:15 PM
From: mishedlo	Read Replies (1) \| Respond to of 110194

Fed's Bernanke-US current acct gap not sustainable WASHINGTON, Feb 5 (Reuters) - Federal Reserve Board Governor Ben Bernanke said on Thursday that the large U.S. current account deficit would have to be reduced over time. "The United States is currently running about a five percent of GDP current account deficit and that's not indefinitely sustainable," he told the South Carolina Association of Investment Professionals Economic Forecasting luncheon in Columbia, South Carolina. "There are going to have to be adjustments over time to bring that down to a more acceptable level. I believe those will happen...that is clearly part of the transition process the economy is going to have to make over the next three to five years," he said. ((Writing by Alister Bull, Washington newsroom, 202-8988300)) ===================================== DJ Fed's/Bernanke -2: "The Fed Has The Luxury Of Waiting" By Michael S. Derby Of DOW JONES NEWSWIRES COLUMBIA, S.C. (Dow Jones)--Low inflation has given the Federal Reserve the "luxury" to be patient before raising interest rates from their current historically low levels, Federal Reserve Governor Ben Bernanke said Thursday. Speaking at a luncheon hosted by the South Carolina Association of Investment Professionals, Bernanke also said trends in productivity are key to the outlook for the labor market. "The Fed has the luxury of waiting," because of low inflation, Bernanke said, in comments that echo last week's policy statement from the Fed's Open Market Committee. Bernanke indicated the central bank isn't seeing glimmers of inflation anywhere on the economic horizon, despite the weaker dollar and rallying commodity prices. Noting that inflation was "very hard to forecast", Bernanke said the deflation fears that spooked bond market participants last year have subsided a lot, adding that the Fed also believes inflation will remain "contained." He said the economy has come through a rough patch and is much better placed for the type of balanced recovery that draws on corporate as well as household spending. Bernanke specifically rebuffed some conventional wisdom that says multi-year highs in commodity prices are indicative of inflation brewing in the pipeline.

To: yard_man who wrote (7008)	2/5/2004 2:56:11 PM
From: mishedlo	Read Replies (1) \| Respond to of 110194

MARKET TALK is edited by Darlene Ross of Dow Jones Newswires, 201 938-2085; darlene.ross@dowjones.com] 1850 GMT [Dow Jones] USD/CAD has surged after USD improved generally in wake of comments from Fed Governor Bernanke. Currently at C$1.3385, almost 100 ticks above sessional low and not far from key pivot zone at C$1.3430-40. (DBC) 1845 GMT [Dow Jones] The U.S. 10-year has tested important daily resistance at 4.174%, which is a potential intraday top. Given quiet trading ahead of Friday's January jobs report, 4.174% may be a "magnet price" around which the yield would oscillate during the rest of the current session. If resistance is taken out the yield will be pointed towards the area between 4.292% and 4.259%. But if the yield backs off here then traders can look for a dip to 4.027%. (SWC) 1842 GMT [Dow Jones] Stock index futures get a jolt after Bernanke says GDP can exceed 4% this year, and low inflation has given Fed luxury of being patient on rates. Buy-stops hit around 1128.00 in March S&P, contract still hasn't managed to tackle resistance at Wednesday's open-outcry high 1132.30. March S&P last +6.10, March Nasdaq +13.00, March DJIA +60. (KJZ) 1833 GMT [Dow Jones] 10-year has made a brief run above 4.17%, its highest level this week. The market remains very nervous ahead of payrolls, but traders say a figure in the 125 to 225K region will maintain the range trade. 10-yr last 4.16%. (MLM) 1826 GMT [Dow Jones] Looks like the fed funds futures market may be on target with its priced in Fed expectations. Bernanke says Fed can be patient, and fd funds futures pricing in a late summer hike. (CMN) 1823 GMT [Dow Jones] The selloff in Treasurys is broad based with the 2/10's curve at 233, only a touch flatter from 234 before Bernanke spoke. Traders are jittery before payrolls and have focused on his bullish labor market remarks. (MLM) 1813 GMT [Dow Jones] As for those looking for hints on monetary policy, Bernanke said low inflation gives the Fed the "luxury" of being patient when it comes to increasing short term rates, which sit at 1.0%. Many in the market expect the Fed to raise rates this summer. Treasurys are weaker on the Bernanke comments. (ATC) 1811 GMT [Dow Jones] As Treasurys come under pressure, so swap spreads are edging wider. 5 & 10-yr spreads now out by around 1.5 BP at 41.5 and 40.5 BP. 10-yr in the middle of its wider 35 to 45 BP range, but a close above 40 BP would be the first since Dec.3. (MLM) 1810 GMT [Dow Jones] Bernanke may be on the wire saying that deflation risk has "retreated very substantially," but fed funds futures prices aren't off much from where they were earlier. Contract still sees August 10 FOMC meeting as first 100% chance of rate hike this year. (CMN) 1808 GMT [Dow Jones] Bernanke says that a weaker USD will help US exports and that its value is not determinant of inflation, which will perhaps alleviate concerns of those who fear a declining dollar will usher in higher consumer prices eventually. This all ahead of the G7 meeting, which begins Fri, and will be closely watched by bond and F/X participants for any comment on exchange rates. (ATC) 1807 GMT [Dow Jones] Canada's GDP will grow by 3.0% this year, according to a survey of 55 economists by consulting firm Watson Wyatt. The survey forecasts inflation of 1.8% in '04 and 2.1% for the long-term, and 4.1% growth in the U.S. in '04. Canadian labor productivity growth is seen at 2.0% for the long term, while unemployment rate is seen dropping from 7.4% this year to 6.8% longer-term. (DBC) 1806 GMT [Dow Jones] Eurodollar futures extend lows as Bernanke seems to be preparing market for rate hike. No huge moves, however, with Sep last down 4 BP. Those buying puts earlier seemed to have the right idea though. Support at 98.355, second pivot drawn from Wed's action. (KJZ) 1804 GMT [Dow Jones] Treasurys are lower after Bernanke said signs of deflation have subsided substantially, leaving some market participants with the idea the Fed could move sooner rather than later. But Bernanke also said that inflation is "contained" which would give the Fed plenty of room to simply stay on hold. "This is ridiculous," said one analyst who attribute the knee-jerk reaction to jitters ahead of Fri's employment. "It's really hard to put a lot of weight behind it," he added. 10Y now at 4.13%, down from the 4.16% touched after Bernanke's comment, but up from 4.10% area beforehand. (ATC) 1800 GMT [Dow Jones] The dollar is gaining ground as Fed Governor Bernanke asserts that inflation will remain "contained," 2004 GDP could top 4% and recovery will be balanced. EUR/USD at 1.2580, USD/JPY at 105.53, USD/CHF at 1.2454 and GBP/USD at 1.8376. (SBC) 1758 GMT [Dow Jones] Stock index futures rise in subdued trade as participants wait for Fri's jobs report. A little noise from Fed's Bernanke, but the headlines are having greater impact on credit markets. Traders see larger chance of a strong jobs report than a weak one, so not too many wanting to sell aggressively, despite market's shaky technical condition. "People have gotten conditioned to buy on deep dips the past six months," says one floor trader. March S&P last +0.40, March Nasdaq +5.00, March DJIA +12. (KJZ) 1757 GMT [Dow Jones] Reiterating what many private sector economists expect, Bernanke says that 2004 GDP could top 4%. In addition, the deflation concerns first flagged last year by the Fed have subsided significantly, he said, adding he is confident inflation will be "contained." (ATC) 1755 GMT [Dow Jones] Bernanke remarks may have come a little late, but they were worth the wait for Treasury futures bears. Contract has dropped back about 10/32 to near unchanged. (CMN) 1754 GMT [Dow Jones] Fed Bernanke has started to speak and is saying that worst problems plaguing the corporate sector of the economy have been overcome. Bernanke also expects a more balanced recovery in the U.S. economy. (ATC) (END) Dow Jones Newswires 02-05-04 1350ET(AP-DJ)--02-05-04 1350EST