U.S. INTEREST RATES: SPLIT PERSONALITY.(interest rates and the securities industry)(Statistical Data Included)

Futures (Cedar Falls, Iowa), July, 2001 by Jobman, Darrell

The Fed has been pushing short-term rates down aggressively. but longer-term rates have been rising. Now traders have to make the shift to dealing with a 'normal' yield curve.

Anyone who has any interest in interest rates is well aware of the attitude of the U.S. Federal Reserve in this market this year. After ending a tightening phase with a final 50-basis-point increase to bring the Fed funds rate to 6.50% on May 16, 2000 -- one squeeze too many, some believe -- the Fed sat on its hands during the rest of 2000 as many sectors of the U.S. economy went into a sudden, sharp slowdown. That position reversed completely when 2001 arrived.

Only a couple of weeks after declining to reduce the Fed funds rate, the Fed surprised virtually everyone Jan. 3 by...

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