EFFECTIVE 5:00 PM EASTERN TIME: 11/17/97 /_________________\
KEY INDICATOR CURRENT CHANGE FROM LAST YIELD |6-Mth CD :5.72% *|
--------------- --------- ---------------- ------ |11th COFI:4.941% |
3-month T-Bill: 5.16 - up 5 basis pnts-5.30% |6Mo-LIBOR:5.805% |
10 Year T-Note: 102 04/32 - up 10/32 -5.83% |1Yr TBill:5.44% *|
Long Bond.....: 100 26/32 - up 20/32 -6.07% |3Yr TBill:5.77% *|
Dow Jones.....: 7698.22 - up 125.74 |5Yr TBill:5.81% *|
FHLMC 60 day..: 7.32% - down from 7.37% (11/14) |10YrTBill:5.92% *|
FNMA 60 day...: 7.29% - from 7.29% (11/14) |30YrTBond:6.20% *|
|PRIME - 8.500%|
Todays Interest Rate/Loan Fee Pricing Trend: |DISCOUNT - 5.000%|
*** UP *** |FED FUNDS- 5.50 |
============ |_________________|
* Wkly Average ending 11/07
With the October Industrial Production report behind us, the next potential market moving report comes tomorrow when the Labor Department releases the October Consumer Price Index (CPI) report (+0.2% overall and core forecast). Other than these two reports, this is a fairly light week in the economic reports department. However, Fed Chairman Alan Greenspan is scheduled to testifies before the Senate Budget Committee regarding Social Security.
The Federal Reserve reported this morning that Industrial Production increased a robust 0.5% in October, and September production was revised lower to a 0.5% increase from 0.7%, but lower than the 0.7% increase that the markets had forecast. The increase pushed the Capacity Utilization Rate up a tenth to 84.3% - the highest level in 2 1/2 years - but also lower than the expected 84.7%.
The October strength in industry was widespread except for mining and oil drilling where output fell 1.1%.
However, so far economists aren't greatly concerned. There's slack capacity in other parts of the world. Plus U.S. business investment in machinery and other equipment has been growing rapidly, increasing productive capacity by 3.9% from a year ago.
On Friday, the 30-year bond eased 3/32, raising its yield slightly to 6.10%, near its lowest level since early 1996. The yield on the 30-year benchmark bond has dropped from 6.4% since stock markets around the globe began their sell-off last month, and is down from almost 6.7% since August.
Prices entered US trading higher, due primarily to continued woes in Japan, where the Nikkei fell another 2.2%. Add to that further ratings downgrades of Japanese banks and the safety appeal of Treasuries was very much intact.
Relatively friendly data from retail sales (-0.2%) and PPI (+0.1% overall and an unchanged core rate) didn't hurt either, but they were not the primary catalysts for the morning rally.
At the morning highs, the bond was up better than a half point. These gains were erased in the afternoon as rumors of a Japanese bank bailout being announced this weekend swept through the market.
The US/Iraq conflict continued to heat up and eventual military action appears more likely, but the financial markets continued to show little interest....