VOLATILITY LIKELY TO REMAIN LOW IN DEBT FUTURES

  Financial analysts see little chance
  that U.S. interest rate futures will break out of their narrow
  ranges and low volatility during the remainder of the week.
      "We got a little volatility Wednesday," said Staley
  Commodities International analyst Jerome Lacey. "But for the
  moment we're still in a trading range."
      Even unexpected developments concerning the growth of the
  U.S. economy may not be enough to spur the market out of its
  sluggish state, the analysts said.
      "It (the bond market) has not yet demonstrated that it can
  break out of its very low volatility," said Carroll McEntee and
  McGinley analyst Denis Karnosky. "It needs something, but it's
  not going to be news about the economy," he said.
      Karnosky said that the bond market will possibly break out
  of the doldrums if participants perceive that the dollar has
  stabilized and the Federal Reserve has more room to conduct
  monetary policy.
      But even Wednesday, when fed funds were below six pct, the
  dollar strong and oil on the soft side, bond futures attracted
  eager sellers when contracts approached recent highs, he said.
      In addition to a changing perception about the dollar and
  monetary policy, Golden Gate Futures president Norman Quinn
  said the beginning of April could bring foreign investors back
  into the marketplace.
      "The market is beginning to feel there may be demand at the
  beginning of the fiscal year in Japan on April 1," Quinn said.
      Quinn echoed the sentiment of many analysts that there are
  large amounts of cash waiting to be invested. If Japanese
  investment in U.S. securities does materialize at the start of
  Japan's fiscal year, domestic funds may also flow into the bond
  market, he said.
      "We could get a stiff rally, possibly enough to bring
  yields on long bonds down to seven to 7-1/8 pct," compared to
  the current yield of about 7.5 pct, Quinn said.
      In the meantime, even the prospect of new supply is not
  likely to move futures.
      The Treasury's announcement of a 15 billion dlr refunding
  operation did little to move cash government securities prices
  late Wednesday after the close of futures.
      "I'd be surprised if supply pushed us out of it (the
  trading range)," Lacey said.
  

