Bond Market Perspective On Stick Shock Congress, CNNfn.

Publication: Finance Wire

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Original Source: MONEY & MARKETS

GREG CLARKIN, CNNfn ANCHOR, MONEY & MARKETS: Well, critics say the Medicare bill and other end of session congressional initiatives will increase the national debt by more than $750 billion over the next decade. "The New York Times" says in an editorial that the spending, quote, goes way beyond pork, saddling the country with long-term obligations of mammoth proportions. Even the politically conservative "Wall Street Journal" said, quote, "At the current pace Howard Dean may yet find a political opening next year to run as a "fiscal conservative." Joining us with a bond market perspective of what some call the sticker shock Congress, Tony Crescenzi. He`s bond market strategist at Miller Tabac. Tony, welcome.

ANTHONY CRESCENZI, MILLER TABAC: Thank you.

CLARKIN: How is the bond market digesting all of this?

CRESCENZI: We can say pretty well because the government now is in deficit, about 400 billion in fiscal year `03 which ended in fact in September. There was a surplus three years ago, the last surplus, about 240 billion, so a big shift of around $600 billion. Yet we`ve seen virtually no impact on market interest rates. We see them staying low. I think this is a sign that it really doesn`t matter right yet that the market will pay attention more if in fact the trend remains as it is, but I don`t think...

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