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(March 4, 2002) FINANCIAL INSTRUMENTS: TREASURY BONDS--It appears bond traders have made their decision regarding the direction of the bond market for the near term. Disregarding Mr. Greenspan's cautious optimism, traders are acting like the recession is history. Evidence can be found in rising yields in the Eurodollars, ten-year notes and 30-year bonds.

Recent economic numbers have been mixed, but the low levels of inventory have caused some to believe that the economy will accelerate the recovery process faster than previously thought. Contrary to this opinion is the fact that consumer spending did not significantly decline during the recession months, which in turn indicates the normal "pent-up demand" is not available to spur on the recovery.

The Chairman stated during his appearance before congress last week that he is not looking to raise interest rates anytime soon. Yet traders are acting as if this is just "Greenspeak" for "I'm waiting for further confirmation of recovery, which seems to be imminent."

After Merrill and HSBC both raised their economic growth forecast, many money managers have been dumping Treasuries for corporate debt, which in times of recovery/expansion tend to pay a higher rate of return. The speed of recovery is ultimately dictating the Feds interest rates policy. This situation simply fuels speculation that The Chairman is playing this one closer to the vest than Jerry Krause on draft day. Technically the decision has been made. The 18-week moving average of closes now resides well above the market at 103-09. The 18-day moving average of closes is also higher than the current price at 102-17. There is a bear crossover in the daily stochastics and the bull trend line drawn from the low on December 17, 2001 has been broken.

RECOMMENDATION--Traders should sell the bonds at 101-18 or better and place a buy stop in the 102-26 while looking to stay short for the whole week.

J.B. Siewers III

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