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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: donald sew who wrote (14457)	5/20/1999 11:06:00 AM
From: Les H	Respond to of 99985

Trade Deficit Menace Strikes Again Bonds are mixed on news of a larger than expected trade deficit. Thirty-year bonds are down 1/32, yield 5.81%. Two-year notes are up 1/32, yield 5.32%. The March trade deficit increased $19.698 billion. A deficit of $18.5 billion was expected. Imports rose 1.3% to a record $97.218 billion. Higher oil prices and an increase in petroleum imports accounted for the bulk of the gain. Exports rose .9% to $77.512 billion. Exports in telecommunications equipment and industrial machinery accounted for the gain. The higher than expected trade deficit is expected to cut first quarter GDP growth by approximately .1%-.2%. First quarter GDP was initially reported at 4.5%, revisions to be released next week. If the trade deficit continues to grow at its current pace, we could see the '99 deficit above $220 billion. In '98 the deficit was $169.3 billion. Bonds had muted reaction to the data. Initial jobless claims fell 12,000 to 299,000. The previous week was revised up 8,000. With the revision, the drop met expectations. Again, nothing new here. The labor market remains very tight. The Philadelphia Fed survey for May fell to 21.1 from 26.4. This was very close to expectations. New orders and shipment rose. Inventories, employees and the average workweek fell. Importantly, prices paid and prices received both fell. This helped bonds pare their losses. Fed Chairman Greenspan and Treasury Secretary Rubin are addressing a House sub-committee on international financial markets. Their comments to date contain no mention of the domestic economy or monetary policy. The European Central Bank left interest rates unchanged at 2.5%. This was expected. Germany's consumer confidence index fell 89.7, matching a 2-½ year low. Friday will bring data on the Treasury's budget statement for April. bonds-online.com