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To: Defrocked who wrote (40362)	5/11/1999 2:56:00 PM
From: John Pitera	Respond to of 86076

I think you are may be on to something on fading a rally on Tues. The bid to cover was lousy no question. Interesting comments from Briefing.com from 11 AM they see some ingrediants of a rally in the long end. developing. I'm agnostic at the moment.....-g- the commercials are long 480,500 and short 458,500 according to the may 4th data 11:05 ET: 30-year: -4/32...5.807%.....GNMAs: -1/32...96-06 While the market turns negative in late morning trading, with the June T-bond establishing new lows for the session at 118-18, we do see some developments that could provide underlying support in the near term: 1.Japanese accounts have been buyers as of late, particularly in the 10-year sector. The spread between 10-year JGBs and comparable Treasuries has narrowed by 3.3 bp since last Friday, a trend we see continuing in the wake of comments from high-ranking official within the Postal Insurance Division of Kampo, who suggested that low nominal yields on JGBs now make other government bond markets even more attractive 2.A number of speculative accounts have been seen moving out of stocks and into the bonds, particularly the long end. Such activity was evidenced yesterday by the surge in open interest in the June T-bond (+21K). 3.COT data reveals that large commercial hedgers remain bullish. As of May 4, such accounts held a net long position in bond futures for the first time since early March (3/2). Over the next two weeks, the market reversed the bearish trend seen throughout the month of February, as the cash bond shed over 20 bp to rally through the 5.50% level.