Orders boost US rate hopes
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Economics Correspondent
A batch of weak economic figures yesterday raised hopes of a fall in US interest rates later this month. The German Bundesbank's decision not to cut its key interest rate did nothing to dent hopes of imminent reductions in Britain and America.
The yield on the benchmark long-term US Treasury bond fell to its lowest for more than two years after reports of a drop in new orders for durable goods and a weaker-than-expected regional manufacturing survey. The dollar surged against the mark, gaining a pfennig to reach DM1.4470 at midday.
Many Wall Street analysts see further clashes between President Clinton and Congress as the only possible obstacle to a move by the Federal Reserve.
Its policy committee meets on 19-20 December - just a week after the monthly meeting between the Chancellor of the Exchequer and Governor of the Bank of England, also widely expected to lead to a fall in interest rates.
The Bundesbank's Council next meets on 14 December but most analysts now do not expect German rates to fall until the new year. There was a drop in the weekly figures for new unemployment claims in the US. But durable goods orders fell 1 per cent in October after strong gains in the previous two months. There was a decline of 7.4 per cent in non-defence capital orders - a leading indicator for investment spending.
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