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To: Henry Volquardsen who wrote (1299)	2/22/1999 3:39:00 PM
From: Paul Berliner	Read Replies (2) \| Respond to of 3536

Mr. Yen says Japan tolerates weak Yen: (Why the change of heart?) biz.yahoo.com Why has Sakakibara changed his tune from last summer, where he bitched once a day for every 1 Yen move in Dollar/Yen over 130? It seems the answer is becoming quite clear to me.... and while this is only a shot in the dark, it seems to make a fair amount of sense. The rise in US Long Bond yields over the past 2 months has been fairly surprising to most. Noteably, as Japan works to recap the banks, it would be prudent at this time to cash in some of their US bond holdings, which as we all know is a lion's share. This could be a big catalyst behind our weak treasury prices. As further evidence, bonds have not followed the Dollar's rally the last few weeks, which is somewhat against trend. Thus, it can be argued that someone is still doing a lot of selling in the bond market, which is countering the current short-term fundamental bullishness for bonds, which is a stronger Dollar. It could thus be concluded that the new 'Weak Yen' policy of Sakakibara's is meant primarily to enhance gains on BoJ sales of US Treasuries. The 10+ Yen move over the last month will net them in the area of an 8% - 12% greater windfall on the sales. The one hole in this theory is that the Yen should be strengthening if they are cashing in some US chips - unless they are quietly selling Yen on the open market to offset this effect. If the Long Bond goes to 6% soon, I think we can all point a finger at Japan with a high degree of confidence that they are responsible for the caper.

To: Henry Volquardsen who wrote (1299)	2/24/1999 5:19:00 PM
From: Chip McVickar	Read Replies (1) \| Respond to of 3536

Notes for the Thread: EU Chief Warns Over Budget Wrangle By PAUL AMES .c The Associated Press BRUSSELS, Belgium (AP) -- European Union leaders must resolve their differences over finances or risk delaying plans to admit new members, the EU's chief executive said Wednesday. Jacques Santer, president of the EU's executive agency, said he doubted the 15 leaders would resolve their complex budget battle at a summit Friday. But he said they must do so by a late March deadline. ''The credibility of the European Union is at stake,'' he told reporters ahead of the conference outside Bonn, Germany. He said failure to resolve differences over revamping the EU's $93.5 billion annual budget could postpone plans to admit new members from eastern Europe. ''We could be headed for a delay of not only several months, but several years,'' he warned. The EU leaders have given themselves until another summit, on March 24-25 in Berlin, to end the dispute over finances during the 2000-2006 period, when up to half of the dozen candidate nations are expected to join. Richer nations, led by Germany, want to freeze the budget and cut their contributions, arguing they pay far too much. Spain and other poorer members, though, are demanding increases in the yearly $38.5 billion aid handouts. They fear they will lose out when even less well-off nations join. France is leading resistance to deep cuts in farm subsidies, which now account for half the EU budget. German Chancellor Gerhard Schroeder, whose country holds the EU's rotating presidency, scheduled Friday's summit so the leaders can speak ''in complete frankness and confidentiality'' about the budget woes. ''This meeting is not about decisions,'' Schroeder wrote fellow leaders. In a speech to the German parliament, he hinted Germany would be prepared to compromise on the budget issue and told his conservative opponents not to ''demand the impossible.'' AP-NY-02-24-99 1628EST