Focus on rates

Press, 5 December 1989, Page 47

Focus on rates

The interest rate market was once again the focus of attention for traders on the New Zealand Futures Exchange yesterday. In spite of the strength of the New York Stock Exchange’s Dow Jones index on Friday’s close, and similar strength in the Australian sharemarket, trading in Barclays share price index futures (BSI) was very subdued. The relationship between the Dow Jones index and the BSI was not nearly as strong as it used to be, however, the dullness of trading was surprising, one . dealer said.

The market opened at 2100 points, moved up to 2115 in morning trading, and stayed steady at that level to the close. Thirty lots traded.

The bank bills market was bought slightly as it became clear the Reserve Bank’s

cash targeet would remain high, the dealer said. But the effect of the resulting drop in call rates was not severe, and the market would have held intact anyway, he said. December 90-day bills opened at 8611 points and traded in a seven point range before closing at 8616.

The bond market began the week with all dealers in a bearish mood. Its early weakness meant there was some good buying and this led to a short covering rally during the middle of afternoon trading, the dealer said. A swing to bullish trading was likely during the next few days, Positions in the market had become larger during recent exchanges, and there was a possibility of volatility and a downward trend in prices as contracts neared their December close-outs.