Oil prices to still pester fixed-income holders

By Rachel Koning, CBS.MarketWatch.com Last Update: 3:37 PM ET Sep 13, 2000

WASHINGTON (CBS.MW) - The nagging effects of surging energy prices on the fixed-income market will be hard to ignore even if an oil spike isn't enough to force the Federal Reserve's hand.

Today on CBS MarketWatch Earnings jitters keep markets volatile J.P. Morgan and Chase: Big deal, but is it big enough? After Hours: Barnes & Noble.com buys Fatbrain Earnings Surprises: Fatbrain, Great Plains and more Market, analysts look for tame August retail sales More top stories... CBS MarketWatch Columns Updated: 9/13/2000 5:32:14 PM ET Only a few weeks after yields on Treasury securities sank to one-year lows on the likelihood the Fed is done hiking interest rates, the jump in energy costs reminded investors of the vulnerability of fixed-income profits in the face of inflation. Accordingly, market participants have driven yields back to their highest marks in several weeks.

Energy production pledges are key should price pressures be exacerbated by the onset of the winter heating season. Crude prices did ease a bit Wednesday as participants continue to assess supply conditions. Read related story. Of course, stock, currency and commodity markets face their own share of trouble amid widespread uncertainty over just how much OPEC is willing to loosen the spigot. In fact, shaky stock trade sent more investors to the safer confines of fixed-income on Wednesday. See Bond Report for Wednesday's price and yield action.

Wake-up call

The Treasury market had settled into a late-summer slumber to essentially wait out the Fed's Oct. 3 policy meeting, the November presidential election and a host of corporate paper to be absorbed in the market this month.

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-- Martin Thompson (mthom1927@aol.com), September 13, 2000

Answers

I don't know. I've got a squeamish feeling about October. That's the month, traditionally, when we have our biggest stock market sell-offs

-- R2D2 (r2d2@earthend.net), September 13, 2000.

I don't see how it can be anyting but. With economic stoppages in France, Britain, and other European countres due to high fuel prices -- and with oil threatening to crash the $40 barrier -- how can the stock market withstand all this turmoil for long?

-- RogerT (rogerT@c-zone.net), September 13, 2000.

I don't know what to do; I've got a mutual fund that is heavy in oil stocks. But, if these supply disruptions spread throughout the world, what good are they? I just don't know whether to sell or not.

-- Nancy7 (nancy7@hotmail.com), September 13, 2000.

Not to worry. I was watching CNBC today and they are still talking about all the promise and upcoming market rises. They seem to have no knowledge or interest in what is happening in Europe. They seem to believe that the Golden Goose will keep laying those precious eggs forever.

-- QMan (qman@c-zone.net), September 14, 2000.