2000-05-03 Fed's Beige Book

Daily Brady Bond Trading Commentary

Wednesday, May 3 2000 

The Fed's Beige Book highlighted the inflationary pressures that appear to be intensifying, including labor tightness and consumer demand.

There was very little in the report to suggest a slowdown in growth, and market sentiment has shifted further in favor of a 50 bps rate hike at the May FOMC meeting. The Treasury market seemed to have caught on to this notion last week, but U.S. equities continued to trade in isolation, at least until today.

Emerging markets debt prices continue to hold in a narrow range, but selling was heavy this afternoon as the many assets slid toward the lower end of the range. We expect choppy trading ahead of Friday's employment report, as dealers square positions.

Local news has not been driving sentiment in recent weeks, and the market has not benefited from positive economic reports, particularly out of Mexico and Brazil.

Contributed by

Credit Lyonnais Securities (USA) Inc.

This report was prepared by Credit Lyonnais Securities (USA) Inc. The information and statistical data herein have been obtained from sources we believe to be reliable but in no way are warranted by us as to accuracy or completeness. Returns set forth in this report are estimates based on internal assumptions, and any changes in these assumptions may have material impact on such estimated returns. This is not a solicitation or any offer to buy or sell securities. We, our affiliates, and any officer, director or stockholder or any member of their families, may have a position in and may from time to time purchase or sell any of the above mentioned or related securities.