NewsMine — economy — united-states — 2004 — 2004-jan-mar — Viewing Item

Treasuries surge as fed ackknowledges jobs gloom Original Source Link: (May no longer be active)    http://www.forbes.com/business/newswire/2004/03/16/rtr1301081.html http://www.forbes.com/business/newswire/2004/03/16/rtr1301081.html Treasuries surge as Fed acknowledges jobs gloom Reuters, 03.16.04, 5:10 PM ET By Pedro Nicolaci da Costa NEW YORK (Reuters) - U.S. Treasury prices jumped Tuesday after the Federal Reserve sounded a note of caution on the labor market at the conclusion of a policy meeting that left interest rates untouched at four-decade lows. While reiterating its pledge to be "patient" in removing monetary stimulus from the economy, the Fed also said new hiring was lagging after its previous statement had suggested some indicators were pointing toward job growth. Minute as the shift might seem, traders are deft wordsmiths when it comes to the Fed, which has become increasingly reliant on the tweaking of this or that term to signal its thinking on monetary policy. "There was a subtle but unmistakable downgrade in their description of labor market conditions, in essence acknowledging the reality on the ground," said Anthony Karydakis, senior financial economist at Banc One Capital Markets. After parsing out the central bank's phraseology, bond investors decide to buy Treasuries in the hope that interest rates would be left at current levels for a while -- possibly until 2005. "The fact that they went out of their way to change a couple of words here and there, that was not lost on the market," Karydakis said. The Fed also kept its balance of risks unchanged, saying the risk of deflation was still "almost equal" to the risk of higher inflation. There had been speculation it would drop the "almost" as a tiny step toward an eventual tightening. Relieved bond traders bid the benchmark 10-year note 22/32 higher in price, pushing yields down to 3.68 percent, the lowest closing yield in eight months, from 3.76 percent late on Monday. The five-year note climbed 13/32, taking yields to 2.64 percent from 2.73 percent. The 30-year bond rose more than a full point, taking yields to 4.64 percent, while yields on the two-year note fell to 1.48 percent from 1.53 percent. The Fed's wording change on jobs comes in the wake of a U.S. employment report that showed just 21,000 jobs were created in February, well below forecasts and far short of the roughly 100,000 monthly pace needed to absorb the number of job-seekers. Fed Chairman Alan Greenspan said last week the job picture should brighten "before long as output continues to expand." He has also emphasized that rates cannot stay low indefinitely. But many economists see no rate increase coming until well into this year or even next. "Given that the job growth is so weak, the Fed is not going to be raising rates any time soon," said Anthony Chan, chief economist at Banc One Investment Advisors. Economic data on Tuesday showed housing construction unexpectedly slowed in February, though starts were revised up for January. Separate reports showed weekly chain store sales were supported by refunds. But neither figure made a ripple in the market, where attention was focused on the Fed. Copyright 2004, Reuters News Service

Adds fewer jobs than expected Blue chips in the red Bush says sending jobs overseas helps us { February 10 2004 } Data dispite bush rich label for small businesses Dollar hits 11 year low against pound Dollar plunges after us jobs data { March 5 2004 } Dollar slides as consumer data disappoint Dollar slips vs high yielders ahead of trade data Euro hits new high against dollar { February 18 2004 } Fed governor says inflation was too low Fed keeps rates steady calls for patience Gop cheers job increase { April 3 2004 } Greenback slides on lack of fed worries { January 6 2004 } Heineken warns weak dollar will hit profits Inventory levels low show wary business { March 12 2004 } Investors should worry about inflation risks Job growth stalls in february { March 5 2004 } Lack of new job deals blow to us economy { March 5 2004 } Levi strauss zips up last us plants { January 9 2004 } Manufacturing jobs replaced with mcdonalds Manufacturing news disappoints economists Misleading unemployment figures muddled job crisis Mutual fund 40bn inflows 2003 { February 5 2004 } Nasdaq leads surging wallstreet Ny fed warns of risks to us economy Reactions to fed rate left unchanged Real unemploytment rate higher argue economists Senator hollings discusses dangers sending jobs overseas { March 30 2004 } Sluggish job growth threatens recovery { February 10 2004 } States expect budget shortfalls Stocks slip oil prices a worry Treasuries surge as fed ackknowledges jobs gloom Us national debt tops 7trillion { February 18 2004 } Us stocks soar after 5 day tumble Files Listed: 34

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