YEAR-LONG CAMPAIGN TO RAISE INTEREST RATES. "WHILE THE DATA IS CLEARLY DOLLAR POSITIVE, I WOULD EXPECT THAT THE MARKET WILL QUICKLY SHIFT BACK TO THE ATTENTION IT IS GIVING TO FED POLICY," SAID ALAN RUSKIN, CHIEF INTERNATIONAL STRATEGIST WITH RBS GREENWICH CAPITAL. TREASURIES RALLIED AS OIL PRICES CLIMBED AND TWO REPORTS SUGGESTED THE PACE OF U.S. ECONOMIC GROWTH COULD SLOW IN THE MONTHS AHEAD. THE NEW YORK FED'S MEASURE OF MANUFACTURING ACTIVITY SLUMPED TO 15.81 IN APRIL FROM A DOWNWARDLY REVISED 29.03 IN MARCH AND FAR SHORT OF ECONOMISTS' MEDIAN FORECAST OF 24.50. THE PRICES PAID COMPONENT HELD RELATIVELY STEADY, SLIPPING TO 37.90 FROM 39.32 IN MARCH. "DEMAND IS GROWING MODERATELY," SAID STEVEN WOOD, AN ECONOMIST WITH INSIGHT ECONOMICS IN DANVILLE, CALIF. "IN ADDITION, BACKLOGS ARE GROWING, INVENTORIES ARE LOW AND MANUFACTURERS ARE HIRING," HE SAID. INVESTORS WILL BE WATCHING MARCH U.S. WHOLESALE AND CONSUMER PRICE DATA THIS WEEK FOR INDICATIONS ON WHETHER THE FED'S EFFORTS TO WARD OFF INFLATION HAVE BEEN SUCCESSFUL. CHICAGO FED PRESIDENT MICHAEL MOSKOW WARNED IN A SPEECH ON MONDAY THAT IF U.S. ECONOMIC GROWTH IS MORE ROBUST THAN EXPECTED, INFLATION COULD INCREASE. "INFLATION CURRENTLY IS NEAR THE UPPER END OF THE RANGE THAT I FEEL IS CONSISTENT WITH PRICE STABILITY. AS SUCH, I BELIEVE MONETARY POLICY MUST BE VIGILANT," MOSKOW SAID. HE ADDED THAT MOST ECONOMIC GROWTH FORECASTS ACCOUNT FOR SOME MODERATION IN HOUSE PRICES AFTER A FIVE-YEAR BULL MARKET THAT SHATTERED SALES AND CONSTRUCTION RECORDS AND SENT HOME PRICES UP ON AVERAGE MORE THAN 55 PERCENT ACROSS THE COUNTRY. THE LATEST READING OF U.S. HOME BUILDER SENTIMENT FROM THE NATIONAL ASSOCIATION OF HOME BUILDERS SHOWED A DROP THIS MONTH TO 50 FROM A DOWNWARDLY REVISED 54 IN MARCH, THE LOWEST SINCE NOVEMBER 2001. THE APRIL HOUSING INDEX FELL SHORT OF ANALYSTS' EXPECTATIONS AND INDICATED THE MAJORITY OF HOME BUILDERS VIEWED THE MARKET AS NEITHER POSITIVE OR NEGATIVE.
