EFFECTIVE 5:00 PM EASTERN TIME: 11/20/97 /_________________\
KEY INDICATOR CURRENT CHANGE FROM LAST YIELD |6-Mth CD :5.80% *|
--------------- --------- ---------------- ------ |11th COFI:4.941% |
3-month T-Bill: 5.13 - up 1 basis pnt -5.27% |6Mo-LIBOR:5.805% |
10 Year T-Note: 102 01/32 - down 6/32 -5.84% |1Yr TBill:5.44% *|
Long Bond.....: 100 27/32 - down 11/32 -6.06% |3Yr TBill:5.76% *|
Dow Jones.....: 7826.61 - up 101.87 |5Yr TBill:5.81% *|
FHLMC 60 day..: 7.34% - down from 7.36% (11/19) |10YrTBill:5.88% *|
FNMA 60 day...: 7.31% - down from 7.33% (11/19) |30YrTBond:6.12% *|
|PRIME - 8.500%|
Todays Interest Rate/Loan Fee Pricing Trend: |DISCOUNT - 5.000%|
*** STABLE *** |FED FUNDS- 5.50 |
================ |_________________|
* Wkly Average ending 11/14
There are no more major economic reports scheduled for release today, or tomorrow for that matter.
The Commerce Department reported this morning that the trade deficit soared 17% in September to $11.1 billion - an eight-month high as imports of toys and telephone equipment helped push the trade gap with China and other Asian nations to new records. The market had forecast a $10 billion deficit.
The U.S. appetite for imports from all countries rose 1.2% to a new record of $89.1 billion in September. Exports slid 0.7% to $78 billion. The deficit with the so-called Newly Industrialized Countries -- Hong Kong, South Korea, Singapore and Taiwan -- more than doubled to a record $2 billion, pushed by a surge of computer imports.
The deficit for the first nine months of 1997 is running at an annual rate of $115.3 billion, even worse than the eight-year high of $111 billion in 1996. Some analysts are predicting the gap will soar to $200 billion next year and will be the main force slowing robust U.S. economic growth.
Also reported this morning, the Labor Department said Initial Jobless Claims rose an unexpected 20,000 to a seasonally adjusted 333,000 last week - the market had forecast 310,000. The 4-week moving average was 315,250, an increase of 5,250. Seasonal factors were said to be the cause for the increase.
Analysts said the number was still low enough to signal a healthy labor market and said it may have been influenced by difficulty in adjusting for Veteran's Day, which left claimants with one less day to file for benefits.
Lastly reported this morning, the Philadelphia Fed said that its index of area manufacturing activity edged slightly lower to 10.1 in November from 11.5 in October - the market had forecast a rise to 17.0. The prices received index jumped to 7.7 from 1.2, Prices paid rose to 17.8 from 15.5, and the deliveries index was little changed at -11.3 from -11.4.
The Treasury market extended its impressive seven-month rally yesterday, setting the groundwork for an expected assault on the psychologically important 6% yield level. In late trading, the bellwether 30-year bond was up 12/32, lowering its yield to 6.032% from 6.066%. It now stands at the lowest level since Feb. 13, 1996, and within shouting distance of the 6% level. The last time the 30-year bond yield hit 6% was Jan. 19, 1996.
Most of the buying took place on the longer end of the yield curve. In fact, the five-year note rose just 2/32 to yield 5.76%. The buying was sparked by a strong dollar, weakness in foreign markets and a continued rosy outlook on the U.S. inflation front.
The strong dollar continued to render U.S. fixed-income securities, such as Treasurys, attractive. In late New York trading, the dollar was quoted at 126.91 yen, up from 126.15 on Tuesday. Against the mark, the dollar traded at 1.7318 marks, up from 1.7286 on Tuesday.
Elsewhere, a 5.3% overnight drop in Japan's Nikkei 225-stock index encouraged foreign investors to buy U.S. Treasurys as part of a continuing flight to quality.
Wednesday's gains came despite stronger-than-expected housing starts data that underscored the continuing strength in the economy. Housing starts rose 1.4% in October, and September was revised upward to a gain of 8%. October's level marks the fastest pace of home construction in eight months....