U.S. CREDIT MARKET OUTLOOK - SPENDING, M-1

  Brisk increases in personal income and
  consumption are to appear in February data released today, but
  the bond market's recent sluggishness suggests there will be no
  major price reaction unless the rises are much larger than
  expected, economists said.
      Personal income is forecast to rise by 0.6 to 0.8 pct,
  compared with no change in January, while consumption
  expenditures are projected to increase 1.4 to 1.6 pct,
  reversing most of the two pct drop recorded in January.
      M-1 money supply data for the March 9 week will also be
  released. An increase of some 2.3 billion dlrs is expected.    
      Peter Greenbaum of Smith Barney, Harris Upham and Co Inc
  expects a one pct rise in income, led by a strong gain in wage
  and salary disbursements in February.
      Nonfarm payrolls expanded by 337,000 jobs in February, the
  average workweek lengthened by 0.6 pct and hourly wages rose by
  four cts, he noted in a report. Vigorous spending on durable
  goods last month, especially cars, foreshadow a rise of at
  least 1.5 pct in consumption, he added.
      The prospect of bearish data did not trouble the bond
  market much yesterday, with the 30-year Treasury bond slipping
  just 7/32 to 99-28/32 for a yield of 7.51 pct.
      Analysts said the market is still trapped in a narrow
  range, desperately seeking direction.
      "Seasonally adjusted, it's already December in the bond
  market," quipped Robert Brusca of Nikko Securities Co
  International Inc.
      Paul Boltz of T. Rowe Price Associates Inc said the
  steadiness of long bond yields around 7.5 pct, despite some
  signs of a stronger economy, probably reflects expectations
  that inflation will remain subdued.
      But he warned that this assumption might not be justified.
      "It took the bond market a long while to see that inflation
  was not returning to double digits, and now that it has learned
  that lesson, it may be a little slow to see that a four to five
  pct inflation is a real possibility ahead," Boltz said in a
  report.
      After trading late yesterday at 5-15/16 pct, Fed funds were
  indicated by brokers to open comfortably at 5-15/16, six pct.
  

