2000-02-17 Fed Chairman Greenspan
Daily Brady Bond Trading Commentary
Thursday February 17, 2000
Today's comments by Fed Chairman Greenspan may have been intended to convey a more hawkish tone, but when all was said and done it appeared that only short-end Treasury traders were paying attention.
As always, Greenspan tempered his caution with acknowledgement of tremendous gains in productivity and the absence of concrete evidence of inflation. But the message seemed clear: if inflation remains tame and all else equal, we can still expect two or three more tightenings; if inflation rears its ugly head, the Fed will take more severe action.
As we head into the next "wait and see" phase in the Treasury market, there are reasons. including accelerating growth, rising commodity prices, and a positive ratings trend, to stay invested in EM debt and take advantage of the still large yield pick-up. But a rising interest rate environment should temper capital gains potential on most credits.
Contributed by
Credit Lyonnais Securities (USA) Inc.
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