1999-12-14 Debt prices held steady

Daily Brady Bond Trading Commentary

Tuesday December 14, 1999 

Emerging market debt prices held steady in the face of a sharp rise in U.S. Treasury yields.

Yet again, statistics (retail sales and consumer price index for November) point to strong growth and low inflation in the U.S., providing an ideal backdrop for growth in Latin American economies. Treasury traders remain nervous, however, responding to fears among some FOMC members of uncontrollable growth and excessively tight labor markets.

Assuming the Fed stays on hold next week, the early February FOMC meeting will keep the market on edge. Argentina may request an additional $2.2 billion in standby loans from the IMF on top of its existing $2.8 billion extended fund facility.

Additional backing would be a necessary precaution should global liquidity conditions tighten, given the country's need to attract foreign capital next year.

Contributed by

Credit Lyonnais Securities (USA) Inc.

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