Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.banks From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: banks Mon, Jun 22 1992 Date: Mon, 22 Jun 92 05:14:50 EDT Message-ID: 06-22 0000 DECISIONLINE: Banking & Economy USA TODAY Update June 22, 1992 Source: USA TODAY:Gannett National Information Network CONSUMER CONFIDENCE UP: The University of Michigan's index of consumer sentiment, a closely watched measure of consumer confidence, climbed to 80.6 in mid-June from 79.2 at the end of May. Last June, the index was even higher, at 82.1, but it sank again to the mid-'60s in late fall and winter. The Conference Board has reported that its index rose in May for the third consecutive month. STOCKS MAKE COMEBACK: Stocks rode out a "triple witching hour" Friday to advance in an on-again off-again rally. The Dow Jones average of 30 industrials, down 130.01 points from June 8 to June 18, rebounded 11.23 points to 3,285.35. The average finished the week with a net loss of 69.01 points. Analysts said stocks benefited from buying by traders looking for "bargains" after the market's recent decline. BANKS SEEN DOING BETTER: Portfolio manager Ken Heebner says banks and thrifts are among his top picks. He sees a big earnings rebound the next two years, paced by falling loan chargeoffs and more industry consolidation. Also, a continued favorable spread between banks' cost of money and rates at which they lend. Heebner's market outlook: A lackluster Dow, off about 5% or more in 12 months. BOND PRICES EXPECTED TO RISE: Portfolio manager Ken Heebner of Capital Growth Management sees bond prices up about 10% a year out. He sees yields on 30-year Treasuries, now 7.83%, at 7% within 12 months. Reasons: Low inflation, more Federal Reserve easing to perk up the economy and less credit demand in a slow recovery. He says yields could slip to 6.5% if federal borrowing is cut to reduce the deficit. CDS LOSING GROUND: Bank certificates of deposit are losing money to bond funds. In the first four months of this year, the latest figure available, bond funds took in a record-breaking $31.5 billion. Most of the cash going into bond funds has come straight from CDs and money-market mutual funds. Total assets invested by individuals in CDs have fallen $102 billion this year to $961 billion, a 10% drop. RATES NOT SEEN RISING SOON: Savings rates offered by banks aren't expected to rise soon. Short term rates, which govern savings rates, rise when the economy heats up. But few economists expect the recovery to be a strong one. The consensus of 50 economists surveyed by Blue Chip Financial Forecasts says the yield on three-month Treasury bills will rise from 3.7% today to 4.7% by this time next year. Big deal. FIXED MORTGAGES DOWN: Fixed mortgage rates fell to a five-month low last week, the Federal Home Loan Mortgage Corp. says. Thirty-year fixed mortgage rates fell to 8.48% from 8.54% a week earlier. One-year adjustable rates fell to 5.84% from 5.90%. BUDGET DEFICIT SURGES IN MAY: The budget deficit in May surged to $46.9 billion, more than wiping out a modest surplus enjoyed in April, the Treasury reported Friday. Through the first eight months of fiscal 1992, the deficit totaled $231.7 billion, up 32% from the deficit for the same period in 1991. The administration projects a $399.7 billion deficit, but most analysts predict it will be about $330 billion. EXTRA JOBLESS BENEFITS APPROVED: The Senate Friday voted to extend benefits again for the long-term unemployed, which would expire in two weeks. The measure would provide up to 33 extra weeks of coverage to Americans who have exhausted the standard 26 weeks of benefits. The Senate will next have to craft a compromise package with the House, which approved a different plan June 9. President Bush has threatened a veto. OIL PRICES UNCHANGED: Oil prices were unchanged in light trading Friday as traders awaited the results of U.N.-Iraqi meetings on Iraq's request to start selling oil again. Light sweet crude oil for delivery in July settled at $22.26 a barrel at the New York Mercantile Exchange. Iraq has been banned for selling oil for nearly two years. GOLD DOWN, SILVER MIXED: Gold prices fell, and silver was mixed Friday. On the Commodity Exchange, gold bullion for current delivery settled at $340.80, off $1.80. Republic National Bank said gold slipped $1.40 to $340.70. Gold rose in London and Zurich. On the Comex, silver bullion for current delivery settled at $4.020, down from $4.080. In London, the metal rose to $4.10 from $4.09. DOW JONES OPENS ON UPSWING: The Dow Jones average of 30 industrials opens Monday at 3285.35 after closing up 11.23 Friday. The New York Stock Exchange composite opens at 221.96, up 1.35. The American Stock Exchange market value opens at 379.39, up 1.90. The NASDAQ OTC composite opens at 554.20, up 5.03. 24-HOUR TELEPHONE INFORMATION: USA TODAY Money Hot Line. 95 cents a minute. 1-900-555-5555. Banking & Economy Editor: William Snoddy. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution purposes violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM