What The Fed Is Hinting

• January 8, 2002
• Paul Letourneau

Fed officials appear to be clearing the path for
a final interest rate cut at the late January policy meeting, while at the same
time hinting that rates may stay low for an extended period of time. They’re
doing so, analysts say, by highlighting their belief that the contraction that
beset the U.S. economy last spring appears to finally be nearing its end. But
more importantly, those Fed officials who’ve been heard in public lately are
also saying that economic recovery still remains something that won’t happen
until the early summer, and probably not before. Economists say this view
bolsters their already strong belief that the Fed, having cut rates from 6.50%
at the beginning of 2001 to the current level of 1.75%, has one more
quarter-point move to make. 

BROADER MARKET INDEX FUTURES

March S&P 500 futures
(
SPH2 |
Quote |
Chart |
News |
PowerRating) were
lower today, losing 3.50 to close at 1163.30. The March Dow Jones futures
(
DJH2 |
Quote |
Chart |
News |
PowerRating)
closed lower as well, down to 10165.0, a loss of 33.0. The March Nasdaq
futures
(
NDH2 |
Quote |
Chart |
News |
PowerRating) stayed positive on the day and closed higher by 10.50
to end at 1672.00. The March E-mini S&P 500
(
ESH2 |
Quote |
Chart |
News |
PowerRating) was
unchanged at 1166.750.

FINANCIALS

U.S. debt futures closed barely
off Tuesday, with the market getting mixed signals from Federal Reserve
officials on whether they will slash interest rates once again later this month.
March 30-Year T-Bonds
(
USH2 |
Quote |
Chart |
News |
PowerRating) closed down to 101.375, a .060 loss.
The March 10-Year T-Note
(
TYH2 |
Quote |
Chart |
News |
PowerRating) lost 010 to end at 105’090, and
the March 5-Year T-Note
(
FVH2 |
Quote |
Chart |
News |
PowerRating) ended at 105’270, down .005.

CURRENCIES

The March US dollar index
(
DXH2 |
Quote |
Chart |
News |
PowerRating)
closed at 117.23, up .26. The March British pound
(
BPH2 |
Quote |
Chart |
News |
PowerRating) marched
higher to 1.4332, up .0002. The March Japanese yen
(
JYH2 |
Quote |
Chart |
News |
PowerRating) gapped
down below support today. The yen lost .000096 to end at .007560. The March
Swiss franc
(
SFH2 |
Quote |
Chart |
News |
PowerRating) lost 0.00180 to finish at .60420. The March
Australian dollar
(
ADH2 |
Quote |
Chart |
News |
PowerRating) gained .00500 to close higher at
.52190, and the March euro
(
FXH2 |
Quote |
Chart |
News |
PowerRating) dropped again, moving down to
.88990, a .00080 loss.

PRECIOUS METALS

Feb Gold
(
GCG2 |
Quote |
Chart |
News |
PowerRating) closed
higher by .3 to 279.2. March Silver
(
SIH2 |
Quote |
Chart |
News |
PowerRating) dropped .027 to
4.64. March High Grade Copper
(
HGH2 |
Quote |
Chart |
News |
PowerRating) was lower by .0065, and
April Platinum
(
PLJ2 |
Quote |
Chart |
News |
PowerRating) ended higher at 475.3, up 2.00.

GRAINS

March Wheat
(
WH2 |
Quote |
Chart |
News |
PowerRating) rallied
.25 to close at 305. March Corn
(
CH2 |
Quote |
Chart |
News |
PowerRating) was unchanged at 211.50.
March Oats
(
OH2 |
Quote |
Chart |
News |
PowerRating) lost 4.75 to end at 203.75. March Soybeans
(
SH2 |
Quote |
Chart |
News |
PowerRating)
were higher by 4.25 to close up to 435. March Soybean Meal
(
SMH2 |
Quote |
Chart |
News |
PowerRating) pushed
up 1.7 to 145.40, and March Soybean Oil
(
BOH2 |
Quote |
Chart |
News |
PowerRating) was higher by
.12 to 16.47.

SOFTS

The Softs were mostly up today.
March Cotton #2 [CTH2|CTH2] moved .94, taking it to 38.50. March Orange
Juice
(
JOH2 |
Quote |
Chart |
News |
PowerRating) was higher by .65 to 89.65. March Coffee
(
KCH2 |
Quote |
Chart |
News |
PowerRating) pushed
higher .30 to 48.55. March Cocoa
(
CCH2 |
Quote |
Chart |
News |
PowerRating) lost 22 to end at 1389.

March white sugar futures settled
sharply higher on the day, just off a five-and-a-half month high of $252.00 a
metric ton, supported by a very strong technical and fundamental outlook,
brokers said. The Liffe sugar market is currently being well supported by tight
physical supplies of white sugar from the European Union and by a lack of
Brazilian 45 icumsa sugar, they added.

The market was given a further
boost Tuesday, from a technical perspective, following its breach through the
upward trend line at $248.00/ton and then resistance at $250.00/ton, brokers
said. They added that the next resistance level for the March contract is pegged
at $255/ton. The tight supply
fears are also being reflected in the front month of March. March Sugar
(
SBH2 |
Quote |
Chart |
News |
PowerRating) added
.09 to close up 7.80.

Although stop-loss buying took March lumber
futures at the Chicago Mercantile Exchange up the daily limit of $10.00 per
1,000 board feet, spread trading was the main feature of the session.
Technically, March turned in an outside reversal by setting a new three-week low
and bouncing to close higher on the day. Jan also had an outside reversal after
a three-week low. But since it is close to expiration, most of the hedging
activity has already shifted to the March contract.
Jan Lumber
(
LBF2 |
Quote |
Chart |
News |
PowerRating) ended the day higher by .80, to close at 241.20,
and March Lumber
(
LBH2 |
Quote |
Chart |
News |
PowerRating) ended up 8.60 to 259.70.

MEATS

Feb Live Cattle
(
LCG2 |
Quote |
Chart |
News |
PowerRating) closed
lower at 70.125, down .300. Feb Live Hogs
(
LHG2 |
Quote |
Chart |
News |
PowerRating) lost .625 to close
at 54.675. Feb Pork Bellies
(
PBG2 |
Quote |
Chart |
News |
PowerRating) gained .50 to end at 77.800, and
March Feeder Cattle
(
FCH2 |
Quote |
Chart |
News |
PowerRating) finished up at 84.85.

ENERGIES

Today’s blahs send crude oil, heating oil and
unleaded gasoline drifting lower amid a market that had little news to trade on.
After the substantial rally on Friday, Monday’s activity was uneventful, as a
little profit-taking came in and traders treaded water waiting for the API
statistics to come out late today. The energies were mostly lower today. Feb
Crude Oil
(
CLG2 |
Quote |
Chart |
News |
PowerRating) lost .23 to end at 21.25. Feb Unleaded Gas
(
HUG2 |
Quote |
Chart |
News |
PowerRating) lost
1.35 to end at 60.99. Feb Heating Oil
(
HOG2 |
Quote |
Chart |
News |
PowerRating) traded down .37 to
56.82, and Feb Natural Gas
(
NGG2 |
Quote |
Chart |
News |
PowerRating) ended up .010 to 2.281.