6/7/04

Inflation Fox-trot

Hello!

Inflation fears may have been the leading cause of the recent stock market pullback and may have caused the bond yields to spike. The soaring bond yields appeared to have aided the dollar to rally against other currencies, which in turn made the cost of imports appear less expensive thereby quelling inflation fears. What a dance!

Going forward, it could be that the housing frenzy will calm down somewhat, and that inflation fears will continue to abate. If that happens, then it would not surprise us if the Fed raises rates by no more than 1/4% in June and 1/4% in August. Perhaps this is a good time for consumers to consider moving from adjustable to fixed rate mortgages?

Donors upset about possible capital gains if they decide to sell some investment real estate? Perhaps they should consult their advisors about making your organization a partial owner prior to listing their property.

Terri G. Millson, CIMC President

Ray Dicius, GEPC LPL Branch Manager