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Brady Bond Trading Recap

contributed by Credit Lyonnais Securities (USA) Inc.

Tuesday, May 16 2000

Daily Brady Bond Trading Commentary

With debt markets having discounted for several weeks a 50 bps rate hike by the FOMC, Tuesday's tightening announcement had little impact on emerging markets debt prices. In fact, the "relief rally" that began Monday continued, though the market appeared to be taking direction from equities. The Fed's comments, if anything, indicated that the market can look forward to further tightening, as the imbalances between supply and demand remain a concern. The longer term impact on Latin debt markets depend upon how the U.S. economy responds in coming months and on whether or not investors regain their appetite for risk. Sentiment about Argentina will be a major factor for the next several months, as the country's cost of foreign capital has become more expensive in recent weeks. Higher U.S. interest rates and their impact on the peso are also likely to worsen the country's competitive position, particularly versus Brazil.
This report was prepared by Credit Lyonnais Securities (USA) Inc. The information and statistical data herein have been obtained from sources we believe to be reliable but in no way are warranted by us as to accuracy or completeness. Returns set forth in this report are estimates based on internal assumptions, and any changes in these assumptions may have material impact on such estimated returns. This is not a solicitation or any offer to buy or sell securities. We, our affiliates, and any officer, director or stockholder or any member of their families, may have a position in and may from time to time purchase or sell any of the above mentioned or related securities.
 

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