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To: j g cordes who wrote (42413)	5/6/1998 5:35:00 PM
From: Jerry Olson	Read Replies (1) \| Respond to of 58727

Hi Jimmy I'm long BMY too...any selloff on PFE i'll dive in with both feet, ah er and cash too<g>...they have beaten this up in the press just like i thought they would...but!!!, now watch the good news start to come back again, and watch the shorts get killed... Alice R, really said ZIP!!!, the FED isn't doing anything, with interest rates or margin calls...Do we think Alan G is NUTS!!! i don't think so...if the number is good Fri and I suspect it will be, we should rally to breakout numbers on the DOW...shorts will scramble for cover, and the upside surprize will shock the markets... This Q numbers were very very good...the Big Caps will exlode all over again...

To: j g cordes who wrote (42413)	5/6/1998 5:52:00 PM
From: Jerry Olson	Respond to of 58727

Hey Jimmy how about this!!!! Holy Cow!!! very bullish for the BONDS< NO???? Wednesday May 6, 4:37 pm Eastern Time Stunned US bond mkt cheers Treasury's supply cuts By Steven Scheer NEW YORK, May 6 (Reuters) - Stunned by the U.S. Treasury's decision to significantly cut back its debt auctions, bond market participants hailed the radical move as necessary for a government flush with cash. A reduction in government supply had been expected as projections for a budget surplus grew. But the drastic changes the Treasury made on Wednesday to its debt financing schedule in cutting the three-year note and moving the five-year note auction to quarterly from monthly shocked even the most wishful thinkers with the timing and extent of the alterations. ''I am a little shocked that they did both, eliminating threes and reducing the frequency of fives,'' said Douglas Schindewolf, money market economist at Salomon Smith Barney Inc. ''But budget surpluses are going to persist long enough to warrant changes like this. There was no need to hold back any longer.'' Indeed, for the first time in decades, a federal budget surplus -- somewhere in the $43 billion to $63 billion neighborhood, according to the Congressional Budget Office (CBO) -- appears likely in fiscal 1998. Meanwhile, the cutting of the three-year note auction come the third quarter will be first since the seven-year note was eliminated in May of 1993. The result of the Treasury's changes will be a reduction of about $75 billion in supply, taking into account a $3 billion-a month increase in two-year note auction sizes. That number could be less if weekly bill sale sizes are increased. ''This means bills are the only instrument the Treasury can (use to) fine-tune borrowing needs,'' said Patrick Dimick, Treasury market strategist at UBS Securities LLC, adding that they can no longer alter three-year notes while five-year notes will only be offered four times a year. Dimick and other analysts said a change in debt financing was necessary but the Treasury may have gone too far. ''By doing this they are putting their faith in the sustainability of a budget (surplus),'' Dimick said. ''I am shocked they were this radical. ''We know what the tax receipts have done the last few years but I thought they would wait another quarter or two before doing this,'' he said. By altering its schedule, the Treasury, for the most part, helps Treasuries by adding badly needed liquidity into bills and two-year notes. Some players noted bill rates and two-year note yields have been kept down in response to the heavy demand and ever-shrinking supply. Consequently, rates at the front end should gradually rise, analysts said. As for the rest of the curve, the long end has little impact since 10-year and 30-year issues were untouched. But the five-year note should benefit most since the shift to a quarterly issue slashed its yearly issuance to around $72 billion -- half of what it is now. ''The five-year is going to be another real liquid benchmark,'' said Tom Macirowski, senior Treasury market strategist at Goldman Sachs & Co. On Wednesday, the five-year outperformed the rest of the yield curve, falling eight basis points. Still, the Treasury's a announcement boosted the entire market, with the 30-year long bond's yield falling four basis points to 5.94 percent. Even with all the changes the Treasury made, analysts said they will not rule out further reductions in supply, such as the elimination of the November 30-year bond offering. Some analysts, though, said it may have made more sense to add a bond issue, making the 30-year quarterly again from three times a year, since long-term rates are currently so low. ''We have gotten to the point where anything goes with Treasury debt management strategies,'' said Kevin Flanagan, money market economist at Morgan Stanley Dean Witter. ''We have to recognize the Clinton administration is willing to tinker with things that no other Treasury department did.'' Flanagan said the modifications to the debt financing program assume interest rates stay steady. If the Federal Reserve hikes rates at some point, market rates will follow and the Treasury will have to roll the two- and five-year debt into more expensive coupons and cost taxpayers more, Flanagan said. Lost in the frenzy of the Treasury's bombshell was its quarterly refunding details, in which $10 billion of three-year notes -- a $3 billion cut from last quarter -- and $12 billion of new 10-year notes -- rather than the expected reopening of the current issue -- will be sold next Tuesday and Wednesday, respectively. Treasury also said it would reopen the 30-year inflation protected issue come July and will announce a regular index-linked securities schedule later in the year. Related News Categories: US Market News, international, options Help Copyright c 1998 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters s