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UBS Warburg today plans to go live with a web site that will give clients indicative prices for LIBOR-based fixed income derivatives products. Derek Yates, director-fixed income derivatives in London, said the site will cover 90%--in terms of volume--of products the department offers, including swaps, swaptions, caps and floors denominated in seven currencies. These are Australian, Canadian, Hong Kong, Singapore and U.S. dollars, euro and sterling. Execution will still be handled via a telephone call, as Yates believes there are still speed and reliability problems with pure Internet execution.

U.S. corporates are turning once again to writing puts on their own stock in response to sagging share valuations, stratospheric implied volatility and falling interest rates. In particular blue-chip technology companies are re-entering the market as part of their share buyback programs, as their share prices have been dragged down by negative sentiment, say corporate equity derivatives marketers in New York.

Evaluating weather derivatives requires a different approach from that used for evaluating common financial products. One reason is the difficulty of replication, as temperature, rainfall or wind is not a traded asset. Consequently delta neutral techniques cannot be used and, in addition, there is a lack of liquidity in some temperature contracts. Therefore a number of market participants have started to use an actuarial approach when dealing with weather derivatives. Extracting and de trending heating degree days or cooling degree days from data, and then fitting a distribution to the events, makes valuation possible based on the expectation of the loss plus a given risk premium that reflects the sensitivity to risk. However, in doing so, a number of problems arise. These stem from the fact from that, in most cases, a maximum of 40 years of data is available. Some of these issues include:

American Express Financial Advisors has been rotating out of a shorter-maturity Treasury position and into an aggressive overweight in spread product, on the view that Federal Reserve easing will proportionately benefit longer-duration MBS and corporates, according to portfolio manager Colin Lundgren. Lundgren and his team have sold some $840 million in Treasuries over the past seven weeks from their $7 billion portfolio, concentrated entirely within the two- and three-year sectors, and will purchase up to an additional $300 million in MBS and corporate bonds as the year develops. Central to this trade is Lundgren's belief that the bond-market has priced in "a lot of bad equity news," and that short of a major recession, he anticipates yields rising, especially within the short end of the curve, as the Fed eases an additional 100 basis points.

Brandywine Asset Management has recently sold 4% of its portfolios' Canadian bonds and has been buying Australian agency bonds, on the view that the U.S. dollar will suffer a 20% decrease against the Australian currency. Stephen Smith, a portfolio manager of a $1.2 billion global bond fund, says the firm's entire agency allocation, $170 million, is now in Australian agency bonds.

The Lutheran Brotherhood will be seeking to put new cash and proceeds from interest and maturities to work in real estate ABS throughout this year, because the firm is currently underweight the sector relative to ABS indices, according to portfolio manager Steve Lee. Lee, who manages a dedicated ABS portfolio of $300 million, also reasons that the well-documented trouble of several large ABS issuers within the manufactured housing segment, especially firms like Conseco, Oakwood and Vanderbilt, over the last several years has caused some hesitation among buyers. Particularly interesting to him are the home equity loan and manufactured-housing segments, where he notes that industry fundamentals seem to be improving. Also attractive to him about the sector is the fact that many of these issues trade 10-20 basis points wider than credit-card or auto-loan backed deals, at about 30 basis points off of swaps, but have AAA ratings and broad institutional sponsorship.

Chandler Asset Management is trimming its A-rated corporate bond portfolio to focus on agency paper, Treasuries and higher-quality investment grade corporates, according to Kay Chandler, chief investment officer for the firm's $1.2 billion fixed-income portfolio. The San Diego-based firm recently sold the 7.125% DaimlerChrysler (A3/A-) notes of '02, which, combined with money from interest and maturities, she used to rotate into higher-rated financial and industrial credits.

The bond market has largely priced in an 50 basis point cut in the Fed funds rate for Tuesday's FOMC meeting. Given the volatility of U.S. equity markets, coupled with a spate of economic data releases and the specter of a looming financial crisis in Japan, BondWeek asked veteran economists what their thoughts were for a greater than 50 basis point cut.

The bond market has largely priced in an 50 basis point cut in the Fed funds rate for Tuesday's FOMC meeting. Given the volatility of U.S. equity markets, coupled with a spate of economic data releases and the specter of a looming financial crisis in Japan, BondWeek asked veteran economists what their thoughts were for a greater than 50 basis point cut.

A wave of bad reports from companies is rocking the secondary loan market as never before, as increased liquidity and mark-to-market pricing make bank debt much more sensitive to bad news. A slower economy and bad credits are nothing new, but dealers unanimously agree the market has become more reactive to disappointing news, with players racing to unload paper as soon as a company issues a quarterly report or a rumor hits the market. "That's the difference," one trader said. "People are willing to sell on the news."

Bankers last week were saying agents on Nextel Partners' $600 million credit would likely have to increase pricing, but the company says it will pull the deal from the market if presented with an increase. At press time last Friday no new pricing structure had been arranged, but some bankers said one was needed to compete with other telecom deals and mollify lenders concerned that Nextel's parent, Nextel Communications, reported last week that it is expecting first quarter results to be hurt by the slowing economy. ButAlice Kang, director of investor relations at Nextel Partners, said if banks pressure the company on the pricing front the company will not do the deal. "When we negoitated the terms we were firm on pricing and if we can't seem to get the facility done at the current price, then we won't do it at all," she said.