Monetary tightness unfolding fast

Posted Aug 9th 2007 1:27PM by Eric Buscemi
Filed under: Economic Data

For July, investors withdrew $5.5 billion from domestic equity funds, slightly more than in June, which followed $10 billion of withdrawals in May, according to a memo sent out by Tom McManus of BofA yesterday.

International investing also "screeched to a halt", as the $2.0 billion in weekly inflows into funds outside of the U.S. have stopped.

This morning, short-term lending rates, the rates for financial institutions to do business with each other, shot up in Europe -- another sign of tight money.

Retailers also released generally weak monthly sales data this morning, with a few exceptions.

We blogged yesterday that the Fed's objective is to control the psychology of inflation expectations, it appears from all the points listed above that the Fed has succeeded. Both the ECB and the Fed announced they are adding reserves to the system. Look for short-term rates to start coming down in September.

Tags: bernanke, fed, interest, international, investing, lending, monetary, rates, tightness

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Reader Comments (Page 1 of 1)

8-09-2007 @ 1:46PM

steve said...

shouldn't we say "investor's agents". Certainly the owners of stocks are not causing this termoil. It is the money managers buying and selling indiscriminately to make themselves useful and make money.

8-09-2007 @ 2:25PM

The Devil said...

Look this is stupid. YOU ARE ALL PANICKING FOR ABSOLUTELY NOTHING!!! The economy is roaring. Actually there was good news yesterday in the housing market as sales rose and mortgages fell!!!! In fact insiders are beginning to think the real market is going to ROAR!!! I got four calls today asking me to sell my property in Florida, and at really pretty good price. I was surprised, but one of those guys was honest he said the inside out is that we will in fact see the real market pick up and the fed actuallydrop rates the next time they meet.
SO PLEASE PLEASE PLEASE STOP PANICKING!!! THIS IS FOOLISH!!!! AND IMMARTURE!!!