GMM 8 June 01

Please find attached below the Global Markets Monitor (GMM) dated 8 June=20
2001.=20

The contents of the GMM are contained in the Executive Summary below:

? US: Legislative momentum building for price caps. Some prominent=20
economists are advocates. =20
? Europe: ECB holds again, acknowledging that price pressures are likely to=
=20
persist over the next few months. By setting inflation expectations above=
=20
its stated target for the remainder of 2001, the ECB has afforded itself so=
me=20
flexibility in setting interest rates to combat the economic slowdown. =20
Europe=01,s manufacturing sector continues to display weakness, suggesting =
that=20
recovery of Europe=01,s industrial sector may be well behind the U.S.=20
? UK: As expected, the BOE left interest rates unchanged at 5.25 percent at=
=20
its MPC meeting this week. The pound reacted to speculation and political=
=20
factors this week. PM Blair=01,s repeat landslide victory on Thursday and =
his=20
pre-election comments renewed an old debate regarding UK=01,s entry into th=
e=20
euro region. The pound is too strong to join the common currency, and it=
=20
must weaken further in order to assure export competitiveness of British=20
manufacturers. =20
? Country Update - Argentina: The bond swap that closed earlier this week=
=20
buys the Argentine government time to reduce its fiscal deficit. But the=
=20
wave of optimism following the swap of short- for longer- term debt=20
repayments may wash ashore if Argentina cannot meet its IMF fiscal targets=
=20
this year. The debt exchange prompted S&P to remove Argentina=01,s foreign=
=20
currency sovereign credit ratings from CreditWatch on Wednesday June 6 (in=
=20
place since March 19, 2001).=20
? Country Update - Brazil: Brazil=01,s drastic power rationing plan could i=
mpact=20
the short-term supply of some of Brazil=01,s major exports, including steel=
and=20
pulp products. Consumers must cut energy consumption by 20 percent and=20
Industry by between 15 to 25 percent until at least October 2001.
Credit Ratings Activity - India and Mexico: Fitch adjusted downward its=20
outlook on India=01,s sovereign ratings to negative from stable on concerns=
=20
about fiscal policy, privatization and a deterioration in the foreign=20
investment climate. S&P=01,s outlook for Mexico remains positive. But, Me=
xico=20
needs to improve its public finances before the rating agency will upgrade=
=20
Mexico to investment grade. Mexico=01,s foreign currency sovereign is rate=
d=20
=01&BB+,=018 one notch below investment grade. =20

Maureen Raymond-Castaneda=20
and Gwyn Koepke