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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Markets Poised For New Gains?

Associated Press

Fresh economic data showing a benign inflationary picture should boost bond and stock prices on Monday, if the dollar holds together over the weekend, analysts said.

New York markets were closed on Good Friday as the government issued several new economic reports showing slower growth. Analysts said the data support the view that the Federal Reserve Board may not raise shortterm interest rates any further to stop inflation.

Indeed, some entertained the possibility that the Fed may lower rates soon. “I think we can improve” on Monday, said David Ader, a bond market strategist at Technical Data in Boston. The statistics have “virtually eliminated any risk that the Fed tightens, and they’re suggesting that an ease isn’t impossible.”

Bond traders like a stable price outlook because it preserves the value of their investments, which pay a fixed interest rate over time.

Any lift in bond prices could also lift stocks because higher bonds are likely to keep corporate borrowing costs down.

Among the economic news released in Washington Friday:

The Federal Reserve said the nation’s industrial production fell by 0.3 percent and it revised February’s rise downward to 0.1 percent from a previously reported 0.5 percent increase.

The Fed said U.S. manufacturers operated at 84.9 percent of capacity in March, down 0.5 point for the month. It revised the February figure to down 0.2 percent from an initial reported rise of 0.2 percent.

The Commerce Department said business inventories climbed 0.9 percent in February. Commerce revised January’s gain to up 1.3 percent from an originally reported 0.9 percent.

Whether these reports help domestic markets depends on the dollar’s reaction to Japan’s decision Friday to cut a key short-term interest rate and to release an economic stimulus package.

The dollar got a brief lift in Tokyo but stalled after Japan cut its over-night discount rate by 0.75 percentage point to 1 percent.

xxxx Markets closed The three major U.S. stock exchanges and most other financial markets were closed for Good Friday. Stock listings in today’s Spokesman-Review reflect Thursday’s closing price and the market’s performance for the week. The stock exchanges reopen on a regular schedule Monday.