-->Blackouts stun U.S. financial markets
Thursday August 14, 5:45 pm ET
By Amanda Cooper


NEW YORK, Aug 14 (Reuters) - U.S. financial markets were stunned on Thursday in late trade as blackouts struck the East Coast of the United States and Canada, including New York City, shutting down dealing rooms across the region.

"We do not have any systems up, so we cannot trade because there is no where to trade to. We still have some voice brokers, so we have some idea where things are," said a trader at a major European bank in New York who declined to be identified.

The dollar dropped and bond yields tumbled in a flight-to-safety rush as witnesses reported power outages hitting New York, Detroit, Cleveland in the United States and Toronto and Ottawa in Canada.

U.S. power regulators said the outage was not caused by an attack but by an outage at a Manhattan power plant which destabilized the power grid, although dealers' initial fear had been that of sabotage.

But later, New York City Mayor Michael Bloomberg also said the outage was triggered by a problem near Niagara falls at the U.S.-Canadian border that cascaded down through New York State as far south as New Jersey and as far west as Ohio.

"California was not affected by the power outage. But this is creating panic," Enrico Caruso, chief dealer at Tempest Asset Management in Tustin, California, said."Trading is still going on here on the West Coast. But I know three banks in Manhattan have been evacuated. We still don't know if it's terrorism."

Emergency power systems kicked in in dealing rooms around Wall Street, giving traders some comfort. But without the aid of their trusty electronic trading screens, several resorted to the old-fashioned telephone to wind up the last minutes of trade.

Traffic ground to a halt around New York's busy Times Square, where the out-sized electronic billboards went black and puzzled office workers poured on to the streets.

YIELDS DROP, DOLLAR DOWN

Yields on the benchmark 10-year Treasury note (US10YT=RR) were last down at 4.45 percent, up nearly a point in price as investors scooped up safe-haven debt.

"We're trying, we're on auxiliary power but we're struggling to do what we can," one fixed-income trader said.

In the meantime, investor jitters over the blackout pushed the dollar lower against the euro (EUR=). The greenback was last quoted at 1.1270.

"People are trying to figure out right now. The key issue is, is it a power outage or is it something else. Bonds are bid and people are selling the dollar," said Paul Podolsky, currency strategist at Fleet Global Rate Markets in Boston, where power was on and operations were normal.

"We can talk with brokers in New Jersey, but not in New York. The New York brokers have all gone for the day," Podolsky said.

Sources at other investment banks said their dealing systems were running smoothly on emergency power.

"We've been talking to other dealers, and we're all pretty-lighthearted about this. We're just talking about where to go get drinks this afternoon," said a trader of mortgage-backed bonds.

However, news of the blackout did not rattle all markets. The closing bell had already rung in U.S. equity markets, while activity in other markets such as U.S. municipal bonds had already largely wound up for the day.

When asked about whether the U.S. bond market would begin trading at its normal schedule on Friday, Michael Williams, an executive at the Bond Market Association (News - Websites) in Washington, D.C. said:"We just don't know."

(Additional reporting by Victoria Thieberger, Dan Wilchins, Daniel Bases, Gertrude Chavez, Richard Leong and Richard Bravo in New York and Ros Krasny in Chicago)

--> U.S. Treasuries Rise After Power Outages in Northeast (Correct)

U.S. Treasuries Rise After Power Outages in Northeast (Correct)

(Corrects length of time lights flickered at Goldman in eighth paragraph.)

Aug. 14 (Bloomberg) -- U.S. Treasuries rose following power outages in New York, Toronto and Detroit.

The 4 1/4 percent note maturing in August 2003 rose 29/32 at 4:45 p.m. in New York, according to Bear Stearns & Co. The yield fell to 4.45 percent. Earlier the note rose more than a point, sending the yield down to 4.39 percent.

``The fact that the outages are so widespread has raised the nervous conditions of some of the traders who have taken to pruning positions, causing an uptick in Treasury prices,'' Gemma Wright, a director of market research at Barclays Capital Inc. in New York, said in an e-mail. Barclays, which is located on Park Avenue in New York, is operating on back-up generators, Wright said.

Power was also reported out in parts of New Jersey and North Carolina. In New York, power was reported out from the Wall Street area north to the Upper East Side. Power also is reported out in Albany, New York.

``The Treasury markets have run up a little here due to the uncertainty with the situation,'' Bryan White, who manages about $60 billion in money fund assets at Evergreen Investment Management in Charlotte, North Carolina, said in an e-mail.

``No one is panicking, but I thing you are seeing some people moving to the safety of the Treasury market,'' he said.

Financial institutions such as Merrill Lynch & Co. and Goldman Sachs Group Inc. reported that back-up generators had begun to work within seconds of the brown-outs and that their New York-based trading desks had already closed for the day by the time of the power outages.

``We have back-up generators,'' said Peter Rose, a spokesman for Goldman Sachs Group Inc. ``Our lights flickered out for 20 seconds and are now back on.''

While Rose said he couldn't confirm whether trading had been interrupted, he said the brown-outs began after markets closed and that Goldman were able to pass control to offices around the world.

``Trading was already closed and our trading is not affected,'' said Jessica Oppenheim, a spokeswoman for Merrill Lynch & Co. ``Everything is fine at this point.''
Last Updated: August 14, 2003 17:48 EDT


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-->Dass jetzt amerikanische Staatsanleihen gekauft werden, entgeht meiner Logik...aber warten wir mal ab, bis die Asiaten aus den Federn hüpfen...

Gruss Chiron

-->Hallo chiron

das läßt sich ja auch alles nur im Dunkeln machen

Gruß EUKLID