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Piedmont Capital Management will swap 10% of its portfolio from agencies into high-grade corporates over the next few months, on the view that when interest rates finally come down--which for long-term rates has yet to happen-- corporate spreads will tighten. The move from government into high-grade corporates is designed to maximize yield without sacrificing too much liquidity, says Walter Campbell, president and portfolio manager of the firm, located in Hilton Head, SC.

Columbia Partners, a Washington, D.C.-based money management firm, has been extending duration on the expectation of another 25 basis point rate cut by the Federal Reserve and a decline in long-term rates due to a worsening economic picture. Bill Wivel, portfolio manager of some $600 million in taxable fixed-income, says he has been buying 30-year U.S. Treasuries and five-, 10- and 30-year high-grade corporates in the financial, drug and consumer products sectors. The moves extended duration from five years in early June to about 5.20 years as of last Monday. The new duration put the firm at 111% of its most common benchmark, the Lehman Brothers Aggregate, which was at 4.7 years last Monday.

When a Tennessee woman was ordered by a judge to make good on $1,100 in bad checks, she employed her own brand of creative financing and robbed a bank. According to Reuters, Paige Morphis left the courthouse after a hearing on Monday on a bad check charge, used a handgun to hold up the First State Bank in her nearby hometown of Rives, Tenn. and fled into a cornfield. "A teller in the bank recognized her and a search was started in the cornfield,'' said Obion County chief deputy sheriff Heath Cunningham. Morphis eluded the search party, returned to the courthouse and paid off the bad checks, Cunningham said. "Then she went home where we arrested her. We also confiscated about $7,000 left from the bank's money."

Heber, Fuger, Wendin is shortening its duration while buying selectively into the corporate sector, says Donald Jeffery, portfolio manager with the Bloomfield Hills, Mich.-based asset management firm. Jeffery says the firm's average duration is 1.80 years and he aims to shorten it to 1.40 years. The average maturity of the portfolio is less than three years and new purchases have carried 15- to-18-month maturities. In order to capture additional yield, Jeffery watches current versus historical spreads and hits the areas that seem to trade wider. He likes, for instance, the finance sector, because bonds of finance companies trade wider and offer more room for further tightening. As an example, he cites the purchase--at a 90 basis point spread over treasury--of Ford Motor Credit 6.12% '03 (A2/A). Last Monday, the bonds were trading at a price of 101.78. Jeffery mentions that the firm uses new cash or portfolio rollovers to finance its purchases.

James Investment Research, a manager of individually managed portfolios in Alpha, Ohio, is preparing to extend duration by half a year to one year on the view that the economy will not begin to pick up for another six to 12 months. Tom Mangan, portfolio manager of $300 million in taxable fixed-income, says he is concerned about the effect the high levels of corporate and individual debt, problems in Argentina, a slowing economy in Germany and a recession in Singapore will have on the U.S. economy. He says that if weekly jobless claims totals stay above 400,000 this week and next, he will extend duration on the view that the Federal Reserve will cut rates by more than the 25 basis points the market currently anticipates. Mangan says James will extend duration by selling callable agencies and short-term Treasuries to buy 10- to 30-year Treasuries, non-callable agencies and high-grade, non-callable corporate paper. Mangan says that at 3.66 years most of James' portfolios are exactly neutral to the Lehman Brothers Intermediate Government Credit Index.

Credit Suisse Group has agreed not to hire any Morgan Stanley employees until mid-September, a move widely seen as a condition of the severance package under which John Mack, president and coo, left Morgan before joining Credit Suisse First Boston as chief executive. Human resources managers at CSFB sent a copy of the agreement, which covers employees at every level at Morgan, to recruiters last Monday. Mack did not return calls. Press officers at CSFB and at Morgan Stanley declined comment.

Andy Constan, global head of equity derivatives trading and structuring at Salomon Smith Barney in New York, has been promoted to global head of equity derivatives. He replaces Alan Marks who left the firm to pursue other interests, according to an internal memo disseminated late last month by Arthur Hyde and Robert DiFazio, co-heads of global equities, (for the full text, go to www.derivativesweek.com).

Zack Vora, head of interest rate products at Commerzbank in Hong Kong, recently resigned and the German firm is planning to restructure its interest-rate derivatives operations in Singapore and Hong Kong in the wake of the move.

ABN AMRO's global heads of credit derivatives trading and structuring resigned from the firm two weeks ago, reportedly after an ultimatum they had issued to senior management expired unheeded. Regis Copinot, global head of credit derivatives trading, and Fabrice Haddad, global head of credit derivatives structuring, are believed to have carried out a threat to resign if senior management refused to merge credit derivatives with cash credit trading. Copinot and Haddad declined comment.

Foreign fund managers have recently been putting on bond versus swap spread plays in the Singapore dollar-denominated market to take advantage of an expected widening in the spread between the term repo rate and swap spreads. "It's one of the oldest trades in the book," said Bryan Yap, head of interest-rate swaps, Asia, at Deutsche Bank in Singapore, noting that its only recently become feasible in the local market. Interest-rate swappers declined to detail the notional size of typical transactions and Yap could not be reached for comment on this point.