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FIRST CHICAGO
THE FIRST NATIONAL BANK OF CHICAGO
One First National Plaza, Chicago, Illinois
(November 10, 1977) FINANCIAL INSTRUMENTS: INTEREST RATES–OUTLOOK–Turmoil in Southeast Asia and global financial markets is expected to keep the Fed sidelined during the balance of the year. The fed funds rate is expected to end the year at its current 5½% level, and hold there in 1998.
Bond yields have rallied on concerns regarding the future of Southeast Asia. Persistently sound fundamentals at home (real GDP in the 3% range in the fourth quarter), however, suggest that the yield on the 30-year Treasury bond should rise back into the 6<$E3/8>% range by year-end. Signs of a slowdown should then help to bring yields down again in early 1998.
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