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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: Brian Fukuba who wrote (18916)	7/14/1998 11:06:00 AM
From: IQBAL LATIF	Respond to of 50167

Our bond trade is doing extremely well-- U.S. Bonds Rise After Consumer Price, according to Bloomberg they had a biggest gain in almost two weeks after reports on consumer prices and retail sales boosted optimism that Asia's economic slowdown will keep U.S. inflation low in coming months.''Inflation is really dead,'' said Bill Gamba, senior vice president at SG Cowen & Co. ''This continues to prove there will be an effect from Asia on overall U.S. growth and inflation. It's positive for bonds.''The benchmark 30-year U.S. Treasury bond rose 14/32, or$4.38 per $1,000 bond, to 106 18/32, pushing its yield down 3 basis points to 5.66 percent. The yield on the two-year note fell 3 basis points to 5.42 percent. The Commerce Department said the consumer price index rose 0.1 percent last month, and 0.1 percent excluding food and energy costs. Analysts surveyed by Bloomberg News forecast a 0.2 percent rise for both measures. At the same time, retail sales rose 0.1 percent in June, less than the 0.5 percent gain expected. ''We have continued tame inflation; this will certainly help yields'' fall, said Charles Reinhard, market strategist at ABN Amro International, before the report. Bonds yesterday posted the biggest loss in almost a month amid speculation a new Japanese prime minister will take bold steps to pull the country out of recession and fix its ailing banking system. In addition, the International Monetary Fund said it will lend Russia about $14.8 billion this year to help avoid a default. Treasury securities declined as investors saw less reason to park their money in safe U.S. assets to protect against losses overseas. Slowing Anticipated Still, many are optimistic the U.S. economy is slowing enough as a result of Asia's economic difficulties to keep inflation at bay, good for bonds because rising prices eat into the value of fixed-income securities. Bond yields last week fell to the lowest since the government began selling the 30-year securities in 1977, in part because inflation has registered near the slowest in more than a decade. The government on Friday said prices paid to factories and other producers dropped in June for the first time in threemonths. Today's reports also leave intact expectations that the Federal Reserve will leave its target for overnight lending between banks unchanged in the months to come. The Fed hasn't adjusted the so-called federal funds rate since March 1997, when it rose by 25 basis points to 5.5 percent.