EFFECTIVE 5:00 PM EASTERN TIME: 11/07/97 /_________________\
KEY INDICATOR CURRENT CHANGE FROM LAST YIELD |6-Mth CD :5.71% *|
--------------- --------- ---------------- ------ |11th COFI:4.941% |
3-month T-Bill: 5.15 - down 1 basis pnt -5.29% |6Mo-LIBOR:5.805% |
10 Year T-Note: 101 19/34 - down 6/32 -5.90% |1Yr TBill:5.35% *|
Long Bond.....:*99 17/32 - down 4/32 -6.16% |3Yr TBill:5.73% *|
Dow Jones.....: 7581.32 - down 101.92 |5Yr TBill:5.78% *|
FHLMC 60 day..: 7.41% - up from 7.40% (11/06) |10YrTBill:5.90% *|
FNMA 60 day...: 7.34% - down from 7.37% (11/06) |30YrTBond:6.22% *|
*new issue |PRIME - 8.500%|
Todays Interest Rate/Loan Fee Pricing Trend: |DISCOUNT - 5.000%|
*** DOWN/STABLE *** |FED FUNDS- 5.50 |
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* Wkly Average ending 10/31
This time it's Japan's Nikkei index which leads global equity markets lower. The Nikkei fell 4.2% last night, dragging both Asian an European equity markets along with it. (Hong Kong -3.0%, FTSE -2.0%, DAX -3.2%).
Greenspan's speech in Frankfurt this morning was a nonevent - the Chairman discussed problems with productivity and inflation measurement, ground which he has covered many times before.
The Labor Department reported this morning that the nation's unemployment rate sank to 4.7% in October, a new 24-year low, pushed down by robust job gains in a broad range of industries. Employers added 284,000 jobs to their payrolls, and average hourly wages for non-supervisory jumped 6 cents (0.5%) to a seasonally adjusted $12.41. The market had forcast 4.8%, 215,000 and +0.3% respectively.
The employment report was strong on all counts and if not for the flight-to-quality flows from declining stock markets world wide, bonds would surely be down in a big way on this report. Had recent events in Asia not occurred, there is little doubt that the Fed would be tightening in November or December. These events have postponed a tightening move, but they certainly haven't averted the need for tightening.
The unemployment rate is putting upward pressure on wages and another report along these lines could push the Fed to tighten as early as December, and probably no later than February.
Strong demand in the Treasury Department's 30-year bond auction helped lift long-term securities to close higher yesterday. In late trading, the benchmark 30-year bond was up 14/32, lowering its yield to 6.18% from 6.21% Wednesday.
It had been down as much as 3/4 point during the morning in relatively quiet activity. But started to rebound before the auction results were made public and extended its gains through the afternoon.
The $10 billion auction of 30-year bonds posted stronger-than-expected results. The average yield was 6.201%, compared with 6.21% predicted before the auction. The highest yield accepted was 6.207%. The bid/cover was strong at 2.82 relative to the 2.42 average.
The market opened down when the Bank of England (BOE) surprised the market by hiking the base rate by 25 bp to 7.25% and showed no reaction to a much higher than expected increase in weekly jobless claims as the BOE announcement gets top billing.
Initial Jobless Claims unexpectedly shot up by 16,000 last week to total a seasonally adjusted 315,000 - the highest level in nine weeks but remained in a range reflecting a tight labor market....