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From: americast-post@AmeriCast.Com
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Subject: Headline Article
Date: Wed, 18 Nov 92 12:51:16 EST
Message-ID: <1.1992Nov18.125116@AmeriCast.com>


11/18/92


Yield Curve Continues To Flatten: New-Bill Rates Highest Since
June

NEW YORK - The market continued to diverge yesterday with short-
term rates up amid fading hopes for another official credit eas-
ing and long rates coming down due to a benign inflation outlook
and easing concerns about President-elect Bill Clinton's economic
policies.  Weakness at the short end was dramatized by a monthly
sale of $14.26 billion in new one-year Treasury bills that pro-
duced an average interest rate of 3.61%, the highest since June.
Conversely, bonds posted small gains, with the key 75/8% 30-year
issue rising 3/8 point to trim its yield to 7.54%. Intermedi-
aries, which sold off on Monday, also improved.  Mark Grant, head
of capital markets at investment bank Rodman and Renshaw, said
investors are taking several different views of the market.  "We
are seeing three camps of institutional buyers - people worried
about Clinton and Clinton's appointments, people worried about
the general economic situation, and then there are people looking
at inflation numbers and saying, 'Gee, we have terrific rates
compared with the inflation numbers.' "That is why this market is
kind of directionless," he said. "It goes one way, then another."
Prices in the short end were firmer early in the day as overseas
investors moved in to buy shorter maturities.

The market later edged lower in early afternoon after the Federal
Reserve failed to add liquidity, as many traders had expected, by
either buying bills or coupons.  But economists still expect such
a move from the Fed, possibly today#m#wed#m#. Federal funds were
quoted late yesterday at 27/8%, below the Fed's current perceived
3% target.  The three-month bill rate rose one basis point to
3.16%, the six-month rate rose two to 3.38% and the one-year rate
for outstanding paper fell three to 3.54%.

The 63/8% 10-year note closed up 10/32 at 963/4%, to yield 6.84%.
The note had traded on special in the repurchase market in recent
weeks. It was at normal levels after the refunding settled Mon-
day, traders said. The Treasury reopened the outstanding note to
alleviate such tightness.

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