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To: Steeny who wrote (19482)	6/1/1999 5:03:00 PM
From: D.J.Smyth	Read Replies (2) \| Respond to of 41369

Steeny, re rate hike: dailynews.yahoo.com Sunday May 30 12:50 AM ET U.S. Rate Hike Imminent? Don't Bet On It By Knut Engelmann WASHINGTON (Reuters) - With a month to go until the U.S. Federal Reserve's next policy meeting, financial markets are wondering how seriously to take the threat of higher interest rates to help cool down the torrid U.S. economy. The answer, at least if you believe top Fed officials and most of the experts following their every move, is ''not very''. Talk of higher rates has become all the rage in financial markets after the Fed served formal notice last week that it worries about the dangers of an uptick in inflation and may move to raise borrowing costs sometime in the near future. Market interest rates -- the yield on government debt -- have shot up in reaction, and many in the bond market are now convinced the Fed will actually make good on its threat and nudge official rates higher when it meets on June 29 and 30. But the very fact that market rates have already gone up may actually lessen the need for a Fed move, some say. Their argument: Financial markets have understood the message loud and clear and are now doing the central bank's work for it. ''The Fed will wait until it sees the whites of the eyes of accelerating cost and price pressures. Financial markets have already taken the lead and the Fed simply follows,'' said David Jones, a veteran Fed watcher at Aubrey G. Lanston & Co. The message from inside the Fed is similarly cautious. After all, the world's biggest economy has yet to develop a full-blown case of run-away price and cost pressures, even though growth remains unusually strong and labor markets unusually tight in the ninth year of an unbroken expansion. A recent spike in consumer prices scared many into believing the good news on the inflation front was finally over, but officials say the report mostly reflected one-off factors rather than pointing to a new and worrisome trend. Meanwhile, latest data showing that growth in the first three months of this year actually was a bit slower than previously estimated -- 4.1 percent rather than 4.5 percent -- and revealing an unexpected drop in April durable goods orders are ''inconclusive'' at best, top policymakers say. But without clear and unambiguous signs that headline inflation is about to pick up, they hardly have the ammunition they need to justify an increase in key rates. After all, such a move would be felt throughout the U.S. economy and beyond. ''I think (Fed Chairman Alan) Greenspan will need more evidence of continuing strong economic growth and higher inflation and he will not get that until later this year,'' said Sung Won Sohn, economist for Wells Fargo Bank in Minneapolis. Higher rates raise the cost of borrowing and investing in the United States. Beyond that, they could hurt the fragile recovery underway in many of the world's emerging markets by raising the return on investments denominated in U.S. dollars, depriving emerging markets of much-needed capital flows. ''Greenspan needs a political justification before he can raise rates,'' said Sohn. ''The data so far does not give him that justification.'' The fed funds rate, an interbank lending rate that serves as a benchmark for other short-term rates, now stands at 4.75 percent, where it has been since the Fed last cut it in late 1998. The last time it increased that rate was in March 1997. Officials also point out that the Fed has issued warnings about its propensity to raise rates in the future many times before -- this is its so-called ''bias to tightening'' -- but has made good on that threat in fewer than half those cases. Which side of the fence the Fed will come down on now depends on the economic data coming in over the next weeks. Key reports include the May jobs data published on June 4, the May producer price index on June 11, and the May consumer price index on June 16. Fed officials, for sure, will be glued to their desks on those days, picking apart the reports as they search for any sign of an imminent rise in cost or price pressures that could make a rate rise in June unavoidable. But if the Fed does not have the justification for a rate rise yet, one month worth of data might not be enough, either. ''The Fed is following a much more cautious and pragmatic approach to policy now,'' said Jones. ''It'll take a while for the data to unfold. June, to me, is just too early.'' even with the current NAPM data, there isn't much solid justification for a hike. the NAPM data comes on the heels of weak previous several months NAPM data and weak commodity prices

To: Steeny who wrote (19482)	6/1/1999 5:13:00 PM
From: Jacktoad	Respond to of 41369

Steeny; FYI--> I appreciate your posts and find value in the points you bring up. I guess some people haven't figured out how to use the Next button yet. regards; jt

To: Steeny who wrote (19482)	6/1/1999 5:51:00 PM
From: Teri Stephenson	Respond to of 41369

Steeny, I appreciate your posts. I've held AOL since 1996 and have a GTC order to purchase more should we hit the mid nineties. Your impartial TA has been short, to the point, valuable,and, as far as I see, unbiased. Teri

To: Steeny who wrote (19482)	6/1/1999 7:57:00 PM
From: tang	Read Replies (2) \| Respond to of 41369

Steeny, please continue your analyses, I enjoy reading them very much, your posts have a professional touch, very clear and objective. There are people who do not like to see your 'judge it yourself after reading my post' attitude, then again, there are people like that attitude as well, so, do it for us.