European Stars and Stripes (Newspaper) - February 24, 1991, Darmstadt, Hesse                                Sunday february 24, 1991 the stars and stripes Page 17money matters Dollar a catch shown below Are the highest Dollar x Exchange rates for the week of v feb. 17-23 compare with Dollar. Rates for the same period one ear and five years ago. R a a a a a y a a. British Pound one Pound would Cost you. $1,945 1991 $170 1990$1.42 1986 German Mark one Dollar would buy you 1.45  a. 1991 1.66 j 1990 2.34 1986 a military Exchange rate turkish lira one Dollar would buy you 3219 1991 2398 1990 i 586 1986 Dollar on Rise. The Dollar edged higher in nervous trading last week with the possibility of further gains hanging on developments in the persian Gulf War. Many currency traders believe that peace in the Middle East even if its attained militarily will give the . Economy a boost and Send the Dollar sharply higher. 0 a if there is peace there will be a greater Chance for renewed com Sumer Confidence lower Oil prices and an improved business climate in the United states said Petra qty an economist with Citibank. In Europe late Friday the Dollar was trading at 1.496 Marks a gain of roughly 2 pfennig on the week. One British Pound was Selling for just Over $1.95, a gain for the Dob Nar of just under 2 cents on the a a a week. % a a a a in late new York trading Friday the Dollar Rose to 1.505 Marks and $1,945 against the Pound. The. Military Exchange rate in Germany was set at 1.45 Marks for the weekend based on a Price fixing Friday afternoon in Frankfurt. One British Pound will sell for $2.01 through monday at military Banks. A majority of currency traders seem to be optimistic about the dollars prospects for the week ahead. A r. A basically we be had a rather Strong up trend since the end of last week which is linked to the markets Confidence that the War is coming to. A Quick end whether through acceptance of the soviet peace initiative or rapid Victory of Allied forces in a land Battle a said Christian dunis currency analyst with chemical Bank in London. Dunis also said that currency traders were encouraged by Federal Reserve Board chairman Alan Greenspan a testimony to Congress last week in which he said the recession in the United states could Bottom out soon. Dunis predicted that the Dollar will reach at least 1.52 Marks in the next few Day sri and perhaps move higher trom  the stars and stripes ones still retain some Luster despite steady to note yields byte Petruno Chi business writer everybody was bullish in Bonds late last year and guess what a for once everybody was  you bought a 30-year Treasury Bond in mid october you picked up a yield of 9.05 percent. Buy the same Issue today and your yield is just 7.99 percent. That show much rates have fallen As More investors have jumped into the Bond Market. So the Bond Crowt knew what it was doing Locking in rates last year and Early this year. But now what if you have Money to invest Are Bonds still Worth it a or should you opt for Stueks or something else since Early this month the 30-year to Bond yield has stalled right around 8 percent. That a the Bond that experts use As a Benchmark but the Story is much the same on medium term issues As Well. The. Yield on seven year Treasury notes is about 7.7 percent virtually unchanged from Early february. If you look at what a everybody Quot is saying now there is some thought thar the Federal Reserve is going to ease credit further to help re energize the Economy. But the fed directly controls Only very Short term interest rates such As on three month . Even of the fed pushes those rates lower the direction of longer term rates will depend on what investors want not on what the fed wants. Which brings up a Good historical reminder. Since 1974, 7.5 percent to 8 percent has been the floor for Long term to Bond yields. That a a formidable time tested psychological Barrier. A we Are getting Down to the nitty Gritty now in that we have reached these resistance Levels a said Robert Diclemente senior economist at Salomon Bros in new York. To accept much lower Bond yields in i think the Bond Market is going to be in a show me Mode from Here on out a Robert Diclemente vectors probably Are going to have to be convinced that something major has changed. And to a Bond investor nothing is More major a concern than inflation. Quot in 1990, the consumer Price Index Rose 6.1 percent Rotthe year. This year Many economists believe the inflation rate will fall to around 4 percent As the recession limits businesses ability to raise prices. To Bond investors any inflation is bad because it erodes the value of the fixed returns on Bonds. The question confronting would be Bond Market bulls is if we do get 4 percent inflation in 1991, is that Low enough to justify accepting Bond yields below that in year floor of 7.5 pet ent to 8 percent ? a Quot that floor is going to be Tough to break through. In the and and late-190s, Bond investors were constantly playing catch up  Rose faster than Bond yields. Bonds were a losers game. Your return was eaten by inflation. In the 1980s, even As inflation fell to a stable 4 percent annual rate from 1983 through 1988, investors refused to bring Bond yields Down much below 8 percent. After the beating they took in the 1970s, who could blame them they wanted to make sure their returns far outpaced inflation and that a what happened. It May be a Brand new decade but there a no sign that Bond investors have lost their paranoia about inflation. So now that Sample yields on cd in Europe merchants National Bank investment 6-month yield $1,000-9,999& 7% 10.000 24,999 7% 25.000-49,999 ,7.375% 1-.year yield 7%. 7.25% 7.3125% finance Center Federal credit Union investment. Quot $1,000-and above global credit Union investment $1,000-4.999 5.000 9,999 10, 300-24,999 Andrews Federal credit Union investment 6-month yield $1,000-9,99.9 6.4% 10.000 24,999 6.5% service Federal credit Union 4 6-month yield 1-year yield 5.96% 6-Nqonth yield 6.38%. 6.59% 6.8%. A investment a $1,000-2,499 500 9,999 10.000 24,999 25.000-49,999 Keesler credit Union investment $1,000 and up 6-month yield not offered 6.35% 7.28% 7.33% 6-month yield 6.2%. 6.06% a 1-year yield 6.38%. 6.59% 6.8% 1-year yield 6.4% 6.5%. 1 year yield 6.35%. No offered 7.23% not offered 1 year yield 6.5% notes rates subject to change. Stars and stripes Survey conducted feb. 22. 1991. Institutions shown above will provide better rates Tor investments of larger Dollar amounts in most cases. S&9 Sharon Kisiday Long term Bond yields have fallen again to that historical floor a i think  is going to be in a show me Mode from Here on out Quot said Diclemente. A if 4 percent inflation is the Best we can do this year Bond investors May not accept much less than 8 percent yields. By the same Token its hard to imagine interest rates rising soon with the global Economy slowing markedly. For Bonds a stalemate May be. Here. That leaves potential Bond investors in a not so bad situation. If you buy now and rates just level out in 1991, you la earn a 7.5 percent to 8 percent annual yield. That beats the Money Market alternative yield of about 6.5 percent and falling. Can the Stock Market Rma Teh 8 percent the Dow Jones Industrial average has risen 11 percent year to Date but from Here on out to equal an 8 percent Bond yield the Dow would have to finish 1991-at 3,167, up another 235 Points. Certainly some stocks will easily gain 8 percent Between now and the end of the year especially if you count dividends. But Anthony Brown manager of the $133 million Pax world Mutual fund in Portsmouth nli., figures he a safer buying Bonds than stocks now  he Pax fund is a a a balanced fund that owns stocks and Bonds. Last year the fund gained 10.5 percent while the vast majority of Mutual funds slumped. Brown was a savvy Market timer All through the late 1980s. Last Spring he had 65 percent of his assets in stocks and jus 35 percent in Bonds. Now he a headed for 45 percent stocks and.55 percent Bonds the Stock Market has simply gof ahead of itself Browns Iid. For cautious folks who Are afraid of stocks Heights a but who also Are sick of piling up Cash in Low yielding Money Market accounts a Bonds a a May still lie the Best Choice. A a a a a. A a. A a a a. A a interest rates on cd expected to again by the stars and stripes if you re thinking of placing Money into Bank or credit Union certificates of Deposit the time to act might be now. Officials at various financial institutions in Europe trial serve . Service mesh ers say id rates Are Likely to fall once Jnore perhaps As Early As this week. A James o. Smith general manager with merchants National Bank in Frankfurt Germany said cd rates ill Europe have been running slightly ahead of comparable rates at financial institution s lift he United states but the Overall trend fur interest rates overseas and in the United states is Down. Despite tailing rates Smith said the Quot Hanks customers Aren t moving Money out of cd yet to place their funds into other investments. A a our customers have other things on their  Timith said referring to of Dialion desert storm. A. A i he Bank general manager said lie expects Deposit  remain steady for several More months perhaps until  return from the War zone is service member a Are opting for six month or one year cd he said Ever though slightly higher yields can usually he secured when customers Are willing to lock up their Money for longer periods. A