EFFECTIVE 5:00 PM EASTERN TIME: 11/26/97 /_________________\
KEY INDICATOR CURRENT CHANGE FROM LAST YIELD |6-Mth CD :5.82% *|
--------------- --------- ---------------- ------ |11th COFI:4.941% |
3-month T-Bill: 5.07 - down 7 basis pnts-5.21% |6Mo-LIBOR:5.805% |
10 Year T-Note: 102 00/32 - down 1/32 -5.85% |1Yr TBill:5.46% *|
Long Bond.....: 101 03/32 - up 6/32 -6.04% |3Yr TBill:5.73% *|
Dow Jones.....: 7794.78 - down 14.17 |5Yr TBill:5.79% *|
FHLMC 60 day..: 7.35% - from 7.35% (11/25) |10YrTBill:5.84% *|
FNMA 60 day...: 7.31% - up from 7.30% (11/25) |30YrTBond:6.05% *|
|PRIME - 8.500%|
Todays Interest Rate/Loan Fee Pricing Trend: |DISCOUNT - 5.000%|
*** STABLE *** |FED FUNDS- 5.50 |
================ |_________________|
* Wkly Average ending 11/21
The 30-Year bond opened down about 1/4 point, taking its que from the gains in Asian stock markets, and slowly climbed into positive territory as the economic reports were released. The Treasury market will close early today at 2:00PM est in observance of the Thanksgiving holiday.
Meanwhile, yet another bank failure in Japan -- Tokuyo City bank is closed. This prompts another flurry of official statements to the effect of "don't panic!" A rare joint statement by Finance Minister Hiroshi Mitsuzuka and Bank of Japan Governor Yasuo Matsushita, promised there were no more major bankruptcies among financial institutions ahead for the nation.
In a sign of how the closure of four financial institutions, including two in the past three days, has rattled the public, the statement said people were withdrawing their deposits from banks. It urged the public to have faith in Japan's financial system and ignore irresponsible rumors.
The Commerce Department reported this morning that it had revised 3rd quarter Gross Domestic Product down to 3.3% from the previous estimate of 3.5% - the market had forecast a revision to 3.6%. The GDP Price Deflator inched up to 1.5% from the previous estimate of 1.4%.
Purchases of durable goods -- big ticket items expected to last three or more years -- by consumers and businesses were the driving force in the third quarter, jumping at an 18.2% pace, the best in 9 1/2 years. Consumer spending overall rose at a 5.8% annual rate, the fastest pace in 5 1/2 years.
The third quarter seasonally adjusted annual growth rate in the GDP -- the sum of all goods and services produced within U.S. borders -- matched the second quarter pace. Economists believe growth will moderate to around 2.4% next year as labor shortages constrain production and financial turmoil in Asia cuts into U.S. export sales.
Also reported this morning, the labor Department said that Initial Jobless Claims fell an unexpected 33,000 to total a seasonally adjusted 303,000 - the market had forecast 323,000. However, the four week moving average increased by 1,000 to total 316,500.
Also reported this morning, the Commerce Department said that Durable Goods Orders fell an unexpected 0.3% in October (the first drop since May) after an unrevised September increase of 0.1% - the market had forecast a 0.5% increase. The decline came despite a 35.5% jump in aircraft orders, as there were declines in every major category except transportation.
Lastly reported this morning, the Chicago Purchasing Managers said that its manufacturing index rose slightly to 59.5% in November from 56.0% in October. However, the price index fell to 60.5% from 65.2% and the delivery index fell to 49.2% from 52.6%
Bonds ended mixed yesterday, as a strong sale of new U.S. Treasury notes and other, unrelated purchases helped lift longer maturities. In late trading, the price of the benchmark 30-year Treasury bond was up 3/32, lowering its yield slightly to 6.054%, down from Monday's 6.061%.
The market largely ignored evidence of continued strength in the economy, as shown by several data releases during the session.
Among these, the Conference Board's Consumer Confidence Index rose to 128.3 in November from 123.4 in October, lifted by optimism over the current U.S. job market. In addition, existing-home sales rose 2.1% in October to a record seasonally adjusted 4.40 million units.
The reports had modest impact because many investors and traders expect the U.S. economy to lose strength -- and inflation to remain well contained -- as a byproduct of plummeting markets and slowing economic growth in Asia.
Meanwhile, Tuesday's Treasury auction of $11 billion in 5-Year Notes saw good demand. The bid-to-cover ratio, a measure of demand comparing the dollar value of bids submitted with those accepted, was 2.98. That was well above the average of 2.64 for the past 12 5-Year Note auctions....