Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: Bonnie Bear who wrote (14886)	3/16/1998 2:09:00 PM
From: Cynic 2005	Read Replies (1) \| Respond to of 18056

The needle that pricked the Japanese stock market bubble in 1989is BOJ's rising interest rates by a small fraction (insignificant for the economy as a whole, but later proved to be significant.) Deja Vu again? If this happens, look out below! ---------------------------- Monday March 16, 1:27 pm Eastern Time US Treasuries off highs midday on tightening fears NEW YORK, March 16 (Reuters) - U.S. Treasuries shed some morning gains on Monday after a Federal Reserve advisory committee urged a hike in short-term interest rates out of concern for rapid money growth. ''The Shadow Open Market Committee (SOMC) came out with statements that seem to be a bit bearish,'' Tony Crescenzi, chief market strategist at Miller Tabak Hirsch & Co said, referring to a group of economists that follows the Fed. ''It came out at 11 o'clock, and we started to fall soon after.'' The 30-year bond was up 11/32 at 103-18/32 to yield 5.87 percent. The bond had been up nearly 5/8 of a point for much of the morning. The SOMC, which includes a number of monetarists, was reported to favor reducing M2 growth, Crescenzi said. ''And the only way to do that is to raise rates,'' the strategist said. The committee was also said to view the drop in oil and import prices as one-time events, and to believe that Asian economic woes were unlikely to slow the U.S. economy sufficiently, Crescenzi said. In addition, new St. Louis Fed President William Poole's role as a former SOMC member appeared to lend added significance, Crescenzi said. The market was also nearing key resistance levels, the strategist said. ''The market up here doesn't find many buyers because you have the short coupon issues trading so close to the funds rate, the two-year is just under Fed funds...,'' Crescenzi said. ''And there's not much of an appetite for Treasuries under the Fed funds rate, so long as there is no rate cut on the horizon.'' Treasuries opened Monday's session higher helped by dollar strength, rumored central bank buying and short-covering after a CBS ''60-Minutes'' interview with a former White House aide proved less explosive than anticipated. ''A rumor of a big central bank buyer of 10-year notes this morning on the opening propelled us from 121-04/32 up to 121-14/32 right off the open,'' Patrick Dimick, a Treasury market analyst at UBS Securities LLC, said. The dealer that sold the central bank the notes was then rumored to have purchased up to 3,000 June bond contracts, Dimick said. Short covering in the wake of the 60-Minutes interview with former White House aide Kathleen Willey also buoyed prices, the analyst said. ''I think a lot of people expected the dollar and Treasuries to be lower because of Friday's leak that the story was coming out of '60 minutes,' '' Dimick said. ''And then they came in this morning and prices were higher instead...so that probably helped the market firm a bit as well.'' John Canavan, a Treasury market analyst at Stone & McCarthy Research Associates, said dollar's gain against the yen and the market's ability to muscle through some key resistance levels helped prices. ''The Japanese Finance minister said that they weren't going to have any kind of an extra budget to offer stimulus to the market, that really sharply boosted the dollar against the yen. That helped things overnight,'' Canavan said. ''What it did as well, though, is it just bumped prices up against what had been pretty significant resistance, especially for bonds on Thursday and Friday.''