Not this year Economics may be the dismal science, but it's difficult to find an economist these days with a dreary 1996 forecast. And most Fed watchers think that the central bank will cut the benchmark Fed funds rate by at least half a percentage point by the end of the first quarter. They also think the market is a bit too optimistic about the longer-term prospects for budget reduction. It's pretty hard to come up with a sector of the economy that's shockingly strong,'' he says.
Capital spending is slow, and industrial capacity utilization is at a noninflationary level.
Commodity prices are in check. Low rates in Japan relative to those in the U.S. should keep Japanese investors keen on Treasuries. And while wage pressures have become a concern at the Fed, Soss isn't worried. If there is one sector of the fixed-income market that almost all strategists agree is the most attractive, that sector is municipal bonds. Supplies of munis have shrunk dramatically because of state and local government belt-tightening.