U.S. CREDIT MARKET OUTLOOK - HOUSING STARTS
While most of the world's financial
markets will be monitoring the U.K. budget, traders and
analysts in the U.S. credit market will be pouring over latest
housing starts data for fresh clues about current and future
domestic growth trends, economists said.
    Most economists expect the seasonally-adjusted annualized
rate to ease to about 1.75 mln units in February from just
under 1.81 mln in both January and December.
    "The level of housing starts is likely to have declined
modestly but still have remained at a relatively high level,"
said Peter Greenbaum of Smith Barney, Harris Upham and Co Inc.
    Unfortunately, meaningful comparisons between February's
and prior months' underlying trends may prove difficult.
    "Caution should be used when interpreting (December's and
January's) increase," cautioned Smith Barney's Greenbaum.
    "Although underlying fundamentals remain strong -- mortgage
rate stability, healthy income gains -- warmer than usual
weather undoubtedly also had some influence in pushing starts
higher in both months," he added.
    Economists at Shearson Lehman Brothers Inc were more
succinct in a weekly newsletter: "a slight decline across the
board, no particular economic reason, mostly weather."
    Charles Lieberman of Manufacturers Hanover Securities Corp
said single-family homes would account for most of the housing
starts drop although Smith Barney's Greenbaum saw signs of
stabilization in both the single- and multi-family sectors.
    U.S. Treasury Secretary James Baker is also due to appear
before a Congressional committee Tuesday morning.
    Federal funds are expected to open at 6-1/8 to 6-1/4 pct
after being quoted at 6-3/16 late yesterday.
    U.S. government securities prices continued to drift
aimlessly yesterday, with the key 7-1/2 pct 30-year Treasury
bond closing 7/32 lower at 99-25/32. 
 Reuter
