BloggingStocks http://www.bloggingstocks.com BloggingStocks http://www.blogsmithmedia.com/http://www.bloggingstocks.com/media/feedlogo.gif BloggingStocks http://www.bloggingstocks.com en-us Copyright 2012 Weblogs, Inc. The contents of this feed are available for non-commercial use only. Blogsmith http://www.blogsmith.com/<![CDATA[The Stock Market and the Discount Rate Increase: Damage Control and Mixed Messages!]]>http://www.bloggingstocks.com/2010/02/19/the-stock-market-and-the-discount-rate-increase-damage-control/http://www.bloggingstocks.com/2010/02/19/the-stock-market-and-the-discount-rate-increase-damage-control/http://www.bloggingstocks.com/2010/02/19/the-stock-market-and-the-discount-rate-increase-damage-control/#commentsFiled under: , , ,

The Federal Reserve Board raised the discount rate by 0.25% after the close of the market Thursday, raised the minimum bid for the Term Auction Facility (TAF) by 0.25%, and shortened the maximum maturity for primary credit loans to overnight. The stock market has gone lower in reaction to this statement.

Several Fed officials have issued comments emphasizing that this is not the beginning of monetary tightening. However, uncertainty still hangs over the markets despite these statements.

Continue reading The Stock Market and the Discount Rate Increase: Damage Control and Mixed Messages!

The Stock Market and the Discount Rate Increase: Damage Control and Mixed Messages! originally appeared on BloggingStocks on Fri, 19 Feb 2010 13:40:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Bernankediscount rateFederal ReserveFOMCTerm Auction FacilityFri, 19 Feb 2010 13:40:00 EST<![CDATA[Dollar falls, then firms, as Fed commits $800 billion more to ease credit crunch ]]>http://www.bloggingstocks.com/2008/11/25/dollar-falls-then-firms-as-fed-commits-800-billion-more-to-ea/http://www.bloggingstocks.com/2008/11/25/dollar-falls-then-firms-as-fed-commits-800-billion-more-to-ea/http://www.bloggingstocks.com/2008/11/25/dollar-falls-then-firms-as-fed-commits-800-billion-more-to-ea/#commentsFiled under: , ,

The dollar fell, then firmed, against most of the world's other major currencies Tuesday at mid-day, on word of yet another U.S. government intervention to ease the financial crisis. (For full currency data, click here.)

Still, the more important theme, many economists and analysts agree, is how well the dollar has fared given the remarkable increase in debt by the United States and the supply of dollars globally.

The dollar weakened about one cent to $1.3040 versus the euro and about half a cent to $1.5160 versus the British pound on Tuesday at mid-day, after the U.S. Federal Reserve announced it would buy up to $600 billion in mortgage and mortgage servicer-related debt and up to $200 billion in consumer and small business-backed loans, to free up credit in these sectors. The dollar also fell about one cent to 95.53 versus Japan's yen, and about half a cent to $1.1881 versus the Swiss franc.

Under the new programs announced Tuesday, the U.S. Treasury will provide about $20 billion in credit protection to the U.S. Federal Reserve, using money from the $700 billion Troubled Asset Recovery Program (TARP).

In September, the Fed's balance sheet totaled $924 billion, when the first wave of the financial crisis began to freeze credit markets and decimate stock markets around the world. However, if all loan guarantees are accessed, and if all of the remaining $780 billion debt is added to the Fed's balance sheet, that balance sheet would increase to about $3 trillion.

Continue reading Dollar falls, then firms, as Fed commits $800 billion more to ease credit crunch

Dollar falls, then firms, as Fed commits $800 billion more to ease credit crunch originally appeared on BloggingStocks on Tue, 25 Nov 2008 14:10:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>auto loansconsumer loansdollareuroFedinthenewsloansmonetary policyMonetaryPolicystudent loansTARPterm auction facilityU.S. TreasuryyenTue, 25 Nov 2008 14:10:00 EST<![CDATA[Frontal assault on financial crisis has begun]]>http://www.bloggingstocks.com/2008/10/06/frontal-assault-on-financial-crisis-has-begun/http://www.bloggingstocks.com/2008/10/06/frontal-assault-on-financial-crisis-has-begun/http://www.bloggingstocks.com/2008/10/06/frontal-assault-on-financial-crisis-has-begun/#commentsFiled under: , , ,

The frontal assault to check the financial crisis and stem rising fear in credit markets has begun.

The U.S. Federal Reserve Monday doubled its Term Auction Facilities - - its short-term loans provided to banks - - to as much as $900 billion.

"The Federal Reserve stands ready to take additional measures as necessary to foster liquid money-market conditions,'' the central bank said. The Fed also will begin paying interest on bank reserves.

The Fed added that it and the U.S. Treasury are "consulting with market participants on ways to provide additional support for term unsecured funding markets."

As part of the action, The Fed will increase its auctions under the 28-day and 84-day Term Auction Facility operations to $150 billion each. The two forward TAF auctions in November will be increased to $150 billion each, the Fed said.

Continue reading Frontal assault on financial crisis has begun

Frontal assault on financial crisis has begun originally appeared on BloggingStocks on Mon, 06 Oct 2008 11:26:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>banking sectorbanksbond marketcredit marketsEUEuropeFedinthenewsTerm Auction FacilityU.S. Federal ReserveU.S. TreasuryMon, 06 Oct 2008 11:26:00 EST<![CDATA[Republicans sink bailout bill, Dow down 500]]>http://www.bloggingstocks.com/2008/09/29/republicans-sink-bailout-bill-dow-down-500/http://www.bloggingstocks.com/2008/09/29/republicans-sink-bailout-bill-dow-down-500/http://www.bloggingstocks.com/2008/09/29/republicans-sink-bailout-bill-dow-down-500/#commentsFiled under:

In a shock to Wall Street, by a vote of 228 against and 205 for, the House just failed to approve the latest version of the $700 billion bailout bill. Why? Not enough Republicans backed it -- only 65 Republicans ended up voting for; they were running 2-to-1 against Democrats. Why not? Angry communications from their constituents saying they did not like it and a philosophical bent against bailouts. With the election weeks away, is this the Republicans last stand?

Who knows? But the outcome of the vote means that it's back to the drawing board for the bailout bill. Count me among those who believe that a better bill is possible -- that is, a bill that actually defines the problem(s) we face and offers a truly workable solution. I've posted about such a plan here.

Meanwhile, the Fed has injected $630 billion into global markets in the wake of the cratering of three financial institutions (FIs) in Europe. These include Belgian/Dutch insurer Fortis which received a $16 billion government capital injection; the nationalization of British mortgage lender Bradford & Bingley and $50 billion worth of guarantees for Hypo Real Estate Holding. And the Fed is adding $330 billion to its $290 billion currency swap program with global banks and $300 billion to its $150 billion Term Auction Facility (TAF) emergency loan program.

Continue reading Republicans sink bailout bill, Dow down 500

Republicans sink bailout bill, Dow down 500 originally appeared on BloggingStocks on Mon, 29 Sep 2008 14:38:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>bailoutbradford and bingleyBradfordAndBingleyfinancial institutionsFinancialInstitutionshypo real estateHypoRealEstateterm auction facilityTermAuctionFacilityMon, 29 Sep 2008 14:38:00 EST<![CDATA[Mobius: Fed should eventually cut rates to 1% to boost U.S. economy]]>http://www.bloggingstocks.com/2008/08/05/mobius-fed-should-eventually-cut-rates-to-1-to-boost-u-s-econ/http://www.bloggingstocks.com/2008/08/05/mobius-fed-should-eventually-cut-rates-to-1-to-boost-u-s-econ/http://www.bloggingstocks.com/2008/08/05/mobius-fed-should-eventually-cut-rates-to-1-to-boost-u-s-econ/#commentsFiled under: , ,

Talk about a call for a return to a more-accommodative monetary policy.

Investor Mark Mobius said the U.S. Federal Reserve should eventually cut its benchmark, short-term interest rate to 1% to boost the U.S. economy, Bloomberg News reported Tuesday.

"With oil prices beginning to soften, there may be a chance for them to give a boost to the economy by lowering rates again," Mobius told Bloomberg News Tuesday. "It think it's still in the cards, but no one really knows." Mobius oversees about $40 billion in emerging market equities as executive chairman of Templeton Asset Management Ltd.

The doubling of oil prices over the past year and the more than $480 billion in housing-related, credit market write-offs are viewed by many economists as the primary culprits in the U.S. economic slowdown, a slowdown now beginning to dampen global growth, also. Oil prices have retreated about 20% from record-highs, falling to $118 per barrel early Tuesday morning, but unlike Mobius, economist David H. Wang isn't convinced the Fed should hit the 'accommodative button' just yet.

Too soon to lower interest rates?

"I think it would be premature for the Fed to ease rates further. The Fed has used new mechanisms, including the Term Auction Facility and the Term Securities Lending Facility, to help maintain financial system liquidity and the orderly function of markets, and so as long as no further stress events occur in the credit markets, I think they should stand pat on rates," Wang said.

Continue reading Mobius: Fed should eventually cut rates to 1% to boost U.S. economy

Mobius: Fed should eventually cut rates to 1% to boost U.S. economy originally appeared on BloggingStocks on Tue, 05 Aug 2008 12:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>consumer pricescredit crunchFedgdpinflationinterest ratesinthenewsMark MobiusMobiusmonetary policyoil pricesTempleton Asset ManagementTerm Auction FacilityTerm Securities Lending FacilityU.S. economyU.S. Federal ReserveTue, 05 Aug 2008 12:00:00 EST<![CDATA[BNP Paribas, which signaled credit crunch, is now France's healthiest bank]]>http://www.bloggingstocks.com/2008/08/04/bnp-paribas-which-signaled-credit-crunch-is-now-frances-healt/http://www.bloggingstocks.com/2008/08/04/bnp-paribas-which-signaled-credit-crunch-is-now-frances-healt/http://www.bloggingstocks.com/2008/08/04/bnp-paribas-which-signaled-credit-crunch-is-now-frances-healt/#commentsFiled under: , , , , ,

BNP Paribas, which helped signal the global credit crisis that started one year ago this week, has emerged from the credit crunch as France's healthiest bank, Bloomberg News reported Monday.

BNP Paribas will announce Q2 financial results this week. While earnings are expected to be lower year-over-year, they will probably be better than those of its rivals, Societe Generale SA and Credit Agricole SA, according to Bloomberg. BNP Paribas fell 1.76 euros to 59.77 euros in Monday afternoon trading in Paris.

About a year ago, on August 9, 2007, BNP Paribas halted withdrawals from three funds that invested in subprime mortgage debt. The bank's announcement proved to be the first of dozens credit-loss and write-down announcements by banks, mortgage lenders and other institutional investors, as subprime assets went bad, due to defaults by subprime mortgage payers.

The losses and resulting credit crunch compelled the intervention by the world's major central banks. The U.S. Federal Reserve, European Central Bank, Bank of England, Swiss National Bank and Bank of Canada made hundreds of billions of dollars available in specialized loans through conventional monetary policy tools and via new, special 'facilities,' in an effort to maintain credit market liquidity and prevent bad bank/mortgage lender business models from undermining healthy sectors and the broader economies in the United States and the European Union.

Economic growth is the major concern today

London-based economist Mark Chandler told BloggingStocks Monday that concern about credit markets freezing up again has diminished, but concern about the impact of the housing sector's slowdown on broader economies has not.

Continue reading BNP Paribas, which signaled credit crunch, is now France's healthiest bank

BNP Paribas, which signaled credit crunch, is now France's healthiest bank originally appeared on BloggingStocks on Mon, 04 Aug 2008 12:15:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>asset backed securitiesBank of CanadaBank of Englandbanking sectorbanksBernankeBNP Paribasbond marketcredit marketsECBEuropean Central BankFedgdpinthenewsmonetary policymortgage backed securitiessubprime mortgagessubsprimeSwiss National BankTerm Auction FacilityTrichetU.S. Federal ReserveMon, 04 Aug 2008 12:15:00 EST<![CDATA[Bernanke's speech: Good news, bad news ]]>http://www.bloggingstocks.com/2008/07/08/bernankes-speech-good-news-bad-news/http://www.bloggingstocks.com/2008/07/08/bernankes-speech-good-news-bad-news/http://www.bloggingstocks.com/2008/07/08/bernankes-speech-good-news-bad-news/#commentsFiled under: , ,

U.S. Federal Reserve Chairman Ben Bernanke said Tuesday the world's most powerful central bank may extend securities dealers' access to direct loans from the Fed into 2009 as long as emergency conditions "continue to prevail."

Bernanke, speaking Tuesday in Arlington, Virginia, at the FDIC Forum on Mortgage Lending for Low/Moderate Income Households, said "the Federal Reserve is strongly committed" to financial stability and is "considering several options, including extending the duration of our facilities for primary dealers beyond year-end."

Further, Bernanke also said the Fed would "take a leading role" in any liquidation process for a failing investment bank.

The Fed, and other U.S. Government institutions, as well as other major central banks, are in the midst of dealing with the aftereffects of the end of the housing boom in the U.S., which led to a surge in mortgage foreclosures and related asset-back defaults.

Continue reading Bernanke's speech: Good news, bad news

Bernanke's speech: Good news, bad news originally appeared on BloggingStocks on Tue, 08 Jul 2008 10:10:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Bernankebond marketcontagioncredit crunchcredit marketsFedforeclosureshousing sectorinterest ratesinthenewsmonetary policymortgagesTerm Auction FacilityTerm Securities Lending FacilityU.S. Federal ReserveTue, 08 Jul 2008 10:10:00 EST<![CDATA[Is the Fed's desperation finance falling flat?]]>http://www.bloggingstocks.com/2008/05/02/is-the-feds-desperation-finance-falling-flat/http://www.bloggingstocks.com/2008/05/02/is-the-feds-desperation-finance-falling-flat/http://www.bloggingstocks.com/2008/05/02/is-the-feds-desperation-finance-falling-flat/#commentsFiled under: ,

Bloomberg News reports that the Fed is increasing its so-called Term Auction Facility (TAF) by 50% to $75 billion. The reason? The program, which makes emergency loans to banks saddled with asset-backed securities (ABS) such as collateralized debt obligations (CDOs), is busted. That's because the TAF is designed to lower borrowing costs but it has accomplished the opposite.

This comes in response to criticism from a Stanford University economist, John Taylor, who wrote in a study last month that there is "no empirical evidence" the TAF has reduced the premium that banks charge each other to lend cash for three months. In fact, last month's TAF auctions were 2.82% and 2.87% -- above the then-2.5% rate on direct loans through the Fed's discount window. This "seeming anomaly" of the higher rate may have resulted from banks' willingness to pay a premium to avoid the stigma of borrowing from the Fed's discount-window.

This means that despite all the happy talk on Wall Street, we are not out of the woods by any stretch of the imagination. As I pointed out here, investment banks and hedge funds borrow $32 for every dollar of capital. If they owned just those dodgy securities, a mere 6% drop in the $6.1 trillion market for CDOs would wipe out their $340 billion worth of capital.

Continue reading Is the Fed's desperation finance falling flat?

Is the Fed's desperation finance falling flat? originally appeared on BloggingStocks on Fri, 02 May 2008 10:34:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Federal ReserveFederalReserveinthenewsTAFTerm Auction FacilityTermAuctionFacilityFri, 02 May 2008 10:34:00 EST<![CDATA[Fed boosts TAF, expands swaps with ECB, Swiss National Bank]]>http://www.bloggingstocks.com/2008/05/02/fed-boosts-taf-expands-swaps-with-ecb-swiss-national-bank/http://www.bloggingstocks.com/2008/05/02/fed-boosts-taf-expands-swaps-with-ecb-swiss-national-bank/http://www.bloggingstocks.com/2008/05/02/fed-boosts-taf-expands-swaps-with-ecb-swiss-national-bank/#commentsFiled under: , , ,

The U.S. Federal Reserve Friday announced an increase in the amounts auctioned to eligible depository institutions under its biweekly Term Auction Facility (TAF) from $50 billion to $75 billion, starting with the auction on May 5.

The action brings the amounts outstanding under the TAF to $150 billion, the Fed said.

In addition, the Fed also authorized further increases in its existing temporary reciprocal currency arrangements with the European Central Bank and the Swiss National Bank. The arrangements will now provide dollars in amounts of up to $50 billion and $12 billion to the ECB and the SNB, respectively, representing increases of $20 billion and $6 billion. The Federal Open Market Committee (FOMC) extended the term of these reciprocal currency arrangements through January 30, 2009.

Furthermore, the Fed also authorized an expansion of the collateral that can be pledged in the Federal Reserve's Schedule 2 Term Securities Lending Facility (TSLF) auctions. Primary dealers can now pledge AAA/Aaa-rated asset-backed securities, in addition to already eligible residential- and commercial mortgage backed securities and agency collateralized mortgage obligations, beginning with the TSLF auction on May 7, 2008.

Continue reading Fed boosts TAF, expands swaps with ECB, Swiss National Bank

Fed boosts TAF, expands swaps with ECB, Swiss National Bank originally appeared on BloggingStocks on Fri, 02 May 2008 10:10:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>bond marketcredit marketsECBEuropean Cedntral BankFEDinthenewsmonetary policySwiss National BankTAFterm auction facilityU.S. Federal ReserveFri, 02 May 2008 10:10:00 EST<![CDATA[Martin Wolf: The financial situation is serious, but remains manageable]]>http://www.bloggingstocks.com/2008/03/14/martin-wolf-the-financial-situation-is-serious-but-remains-man/http://www.bloggingstocks.com/2008/03/14/martin-wolf-the-financial-situation-is-serious-but-remains-man/http://www.bloggingstocks.com/2008/03/14/martin-wolf-the-financial-situation-is-serious-but-remains-man/#commentsFiled under: , , , ,

The ever-incisive FT columnist Martin Wolf offers a stark and sober analysis of the United States' current financial and economic predicament, but it's an analysis well-worth reviewing, if one has the time.

A synopsis is provided here, but first, full warning: read the analysis when you're feeling well and in a good mood, not during other times.

Continue reading Martin Wolf: The financial situation is serious, but remains manageable

Martin Wolf: The financial situation is serious, but remains manageable originally appeared on BloggingStocks on Fri, 14 Mar 2008 15:32:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Bank of EnglandBank of JapanBear StearnsBernankebond marketBSCcredit marketsECBEuropean Central BankfeaturedFedfiscal policyforeclosuresGDPhousingInternational Monetary FundinthenewsJP Morgan ChaseJPMLipskyMartin Wolfmonetary policymortgagesNouriel RoubiniRGE Monitorsubprime mortgagesSwiss National BankSwissNationalBankTerm Auction FacilityTerm Securities Lending FacilityTrichetU.S. Federal ReserveU.S. Treasury DepartmentFri, 14 Mar 2008 15:32:00 EST<![CDATA[Fed be nimble, Fed be quick, Fed deploys another monetary fix]]>http://www.bloggingstocks.com/2008/03/11/fed-be-nimble-fed-be-quick-fed-deploys-another-monetary-fix/http://www.bloggingstocks.com/2008/03/11/fed-be-nimble-fed-be-quick-fed-deploys-another-monetary-fix/http://www.bloggingstocks.com/2008/03/11/fed-be-nimble-fed-be-quick-fed-deploys-another-monetary-fix/#commentsFiled under: , , ,

The compelling question following the Fed's action, in conjunction with the world's other, major central banks, is whether it will work. Will it be enough to get the U.S. economy moving again?

And as is so often the case in economics, the answer depends on three unknown factors, a pair of economists told BloggingStocks Tuesday. (In an initial review, the market appeared to signal its approval of the Fed's action, with investors sending the Dow 300 points higher to 12,156 in late Tuesday afternoon trading. )

New Fed tool: TSLF

First, the Fed's new Term Securities Lending Facility should convince bank dealers that liquidity should not be an issue, economist David H. Wang said Tuesday. "No bank or bond dealer should fear that they won't be able to find financing. That should improve bond market liquidity," Wang said. In addition, the Fed's willingness to swap U.S. Treasuries for mortgage-backed securities (MBS) should restore some trust -- but by no means total trust -- to the MBS market and help market participants price these securities, he said. The Fed's accepting private mortgage debt collateral speaks directly to where the market is stressed the most, Wang said. However, if MBS's are not pricing and trading, that would indicate continued concerns about liquidity, he said.

Continue reading Fed be nimble, Fed be quick, Fed deploys another monetary fix

Fed be nimble, Fed be quick, Fed deploys another monetary fix originally appeared on BloggingStocks on Tue, 11 Mar 2008 17:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Bernankebond marketCATCaterpillarconsumptioncredit crunchcredit marketsFedhousinginthenewsmonetary policymortgage backed securitiesmortgagesTerm Auction FacilityTerm Securities Lending FacilityU.S. economyU.S. Treasury NotesTue, 11 Mar 2008 17:30:00 EST<![CDATA[Dollar falls to new record-low vs. euro on heightened U.S. recession fears]]>http://www.bloggingstocks.com/2008/03/07/dollar-falls-to-new-record-low-vs-euro-on-heightened-u-s-recess/http://www.bloggingstocks.com/2008/03/07/dollar-falls-to-new-record-low-vs-euro-on-heightened-u-s-recess/http://www.bloggingstocks.com/2008/03/07/dollar-falls-to-new-record-low-vs-euro-on-heightened-u-s-recess/#commentsFiled under: , ,

The dollar plunged to a new record-low of $1.5463 versus the euro Friday, in a global-wide greenback sell-off, before recovering at mid-day after the U.S. Federal Reserve took two actions to pump more money into the beleaguered U.S. banking system.

After the Fed's announcement, the dollar recovered slightly against the euro to $1.5343, but remained down about one-half cent against the British pound at $2.0144 and down about one-tenth yen to 102.60 yen against the Japanese yen.

U.S. jobs data sparks selling

Prior to the Fed's liquidity-enhancing actions, the currency markets drove the dollar down on speculation that the Fed would again lower benchmark, short-term interest rates by 75 basis points at its policy meeting on March 18 in an attempt to stimulate a U.S. economy that shows increasing signs of contraction. Those recession fears grew in the currency market and in the stock market after the U.S. Labor Department announced Friday that the U.S. economy lost 63,000 jobs in February 2008 -- the nation's largest drop in payrolls since March 2003.

However, the dollar recovered somewhat after the Fed, in a surprise move, took two actions to boost banking system liquidity. The Fed increased by $20 billion total the size of its next two Term Auction Facility auctions, known as TAF, to $100 billion, or $50 billion for each auction, to be held on March 10 and March 24.

Second, in an even-more surprising move, the Fed announced the start of new "28-day repurchase transactions" totaling another $100 billion. Further, the Fed said for the new 28-day loans, banks will be able to post as collateral U.S. Treasuries, agency debt, or agency mortgage-backed securities -- which are eligible as collateral in conventional open market operations.

Continue reading Dollar falls to new record-low vs. euro on heightened U.S. recession fears

Dollar falls to new record-low vs. euro on heightened U.S. recession fears originally appeared on BloggingStocks on Fri, 07 Mar 2008 11:25:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Bank of Englandbond marketBritish poundCPIcredit marketsdollareuroEuropeEuropean Central BankexportsGDPimportsinflationinterest ratesinthenewsjob growthjobsmonetary policyoilTerm Auction Facilitytrade deficitU.S. economyU.S. Federal ReserveyenFri, 07 Mar 2008 11:25:00 EST<![CDATA[Fed increases March 10 and 24 term auction facilities to $50B each]]>http://www.bloggingstocks.com/2008/03/07/fed-increases-march-10-and-24-term-auction-facilities-to-50b-ea/http://www.bloggingstocks.com/2008/03/07/fed-increases-march-10-and-24-term-auction-facilities-to-50b-ea/http://www.bloggingstocks.com/2008/03/07/fed-increases-march-10-and-24-term-auction-facilities-to-50b-ea/#commentsFiled under:

The U.S. Federal Reserve on Friday announced that it's increasing the March 10 and March 24 term auction facilities to $50 billion each to address heightened liquidity pressures in term funding markets, the central bank announced.

The decision represents an increase of $20 billion from the amounts that were announced for these auctions on February 29. The Federal Reserve will increase these auction sizes further if conditions warrant, the Fed added.

Also, the Fed said in order "to provide increased certainty to market participants, the Federal Reserve will continue to conduct TAF auctions for at least the next six months unless evolving market conditions clearly indicate that such auctions are no longer necessary."

Economic Analysis: Friday's decision indicates the Fed believes banks need more short-term liquidity, given continued tight credit conditions and concerns about subprime loan and related asset quality.

Fed increases March 10 and 24 term auction facilities to $50B each originally appeared on BloggingStocks on Fri, 07 Mar 2008 10:10:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Fedinthenewsmonetary policyTerm Auction FacilityU.S. Federal ReserveFri, 07 Mar 2008 10:10:00 EST<![CDATA[Fed to offer $60 billion via term auction facility in March; reiterates TAF policy support]]>http://www.bloggingstocks.com/2008/02/29/fed-to-offer-60-billion-via-term-auction-facility-in-march-rei/http://www.bloggingstocks.com/2008/02/29/fed-to-offer-60-billion-via-term-auction-facility-in-march-rei/http://www.bloggingstocks.com/2008/02/29/fed-to-offer-60-billion-via-term-auction-facility-in-march-rei/#commentsFiled under: , , , ,

The U.S. Federal Reserve will conduct two auctions of 28-day credit through its Term Auction Facility in March, the Fed announced Friday, in a statement.

The Fed said it will offer $30 billion in an auction on March 10, 2008 and $30 billion in an auction two weeks later, on March 24, 2008.

The Fed also reiterated its support for the term auction facility policy. The Fed said: "The Federal Reserve intends to conduct biweekly TAF auctions for as long as necessary to address elevated pressures in short-term funding markets. Decisions regarding auctions in April will be announced by Friday, March 28."

Continue reading Fed to offer $60 billion via term auction facility in March; reiterates TAF policy support

Fed to offer $60 billion via term auction facility in March; reiterates TAF policy support originally appeared on BloggingStocks on Fri, 29 Feb 2008 13:50:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>banking sectorbanksbond marketcredit marketsFedinthenewsmonetary policyTAFTerm Auction FacilityU.S. Federal ReserveFri, 29 Feb 2008 13:50:00 EST<![CDATA[As home foreclosures rise, some in Congress eye FHA refinance plan]]>http://www.bloggingstocks.com/2008/02/27/as-home-foreclosures-rise-some-in-congress-eye-fha-refinance-pl/http://www.bloggingstocks.com/2008/02/27/as-home-foreclosures-rise-some-in-congress-eye-fha-refinance-pl/http://www.bloggingstocks.com/2008/02/27/as-home-foreclosures-rise-some-in-congress-eye-fha-refinance-pl/#commentsFiled under: , ,

With home foreclosures expected to increase in 2008 as the second wave of variable interest rate mortgages reset, an influential member of Congress is expected to introduce legislation that would enable the Federal Housing Administration to buy at-risk loans, enabling them to be refinanced and preventing homeowners from being foreclosed upon, The Financial Times reported Wednesday.

U.S. Congressman Barney Frank, D-Massachusetts and chairman of the House Financial Services Committee, is floating a $15 billion initiative that would authorize the FHA to buy as many as 1 million at-risk mortgages, The FT reported. Some loans, such as those for investment properties and vacation homes, would not be eligible for the program.

The overlooked FHA

Overlooked during the "Roaring 1990s" economic expansion and this decade's housing boom, the Federal Housing Administration is a Depression-era agency that insures loans made to borrowers with poor credit.

Continue reading As home foreclosures rise, some in Congress eye FHA refinance plan

As home foreclosures rise, some in Congress eye FHA refinance plan originally appeared on BloggingStocks on Wed, 27 Feb 2008 16:40:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Barney FrankBushFedFederal Housing AdministrationFHAforeclosuresFrankhousinghousing sectorinterest ratesmortgagesPresident Bushrecessionsubprime mortgagesTerm Auction FacilityU.S. CongressU.S. economyU.S. Federal ReserveU.S. TreasuryWed, 27 Feb 2008 16:40:00 EST<![CDATA[Banks posting a variety of assets as collateral with Fed]]>http://www.bloggingstocks.com/2008/02/25/banks-posting-a-variety-of-assets-as-collateral-with-fed/http://www.bloggingstocks.com/2008/02/25/banks-posting-a-variety-of-assets-as-collateral-with-fed/http://www.bloggingstocks.com/2008/02/25/banks-posting-a-variety-of-assets-as-collateral-with-fed/#commentsFiled under: ,

More than half the collateral backing cash advances made by the U.S. Federal Reserve to U.S. banks is in the form of loans, not securities, the Federal Reserve Bank of New York told The Financial Times.

Economists and analysts had speculated that banks would post only complex housing-related securities -- including mortgage-backed securities -- that they could not refinance elsewhere.

That has not been the case. The Federal Reserve Bank of New York told FT that since the credit crisis began, banks had continued to provide a wide variety of assets as collateral -- including U.S. Treasuries, other government and agency-backed securities, and private-label mortgage-backed securities.

Continue reading Banks posting a variety of assets as collateral with Fed

Banks posting a variety of assets as collateral with Fed originally appeared on BloggingStocks on Mon, 25 Feb 2008 16:02:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Bernankebond marketcredit crunchcredit marketsfeaturedFedFederal Reserve Bank of New Yorkmonetary policymortgage backed securitiesterm auction facilityU.S. CongressU.S. Federal ReserveMon, 25 Feb 2008 16:02:00 EST<![CDATA[Despite inflation, Fed says 'relatively low' interest rates necessary 'for a time']]>http://www.bloggingstocks.com/2008/02/20/despite-inflation-fed-says-relatively-low-interest-rates-nece/http://www.bloggingstocks.com/2008/02/20/despite-inflation-fed-says-relatively-low-interest-rates-nece/http://www.bloggingstocks.com/2008/02/20/despite-inflation-fed-says-relatively-low-interest-rates-nece/#commentsFiled under: , ,

The U.S. Federal Reserve said that despite inflation concerns, "relatively low" interest rates may be needed "for some time," the central bank announced Wednesday in the minutes from its most-recent meeting. At the same time, however, the Fed raised its inflation projections for 2008.

"Several participants noted that the risks of a downturn in the economy were significant,'' the Fed said in minutes of the January 9 and 21 conference calls and the January 29-30 policy meeting last month. "Many participants were concerned that the drop in equity prices, coupled with the ongoing decline in house prices, implied reductions in household wealth that would likely damp consumer spending.''

Last week, in Congressional testimony U.S. Federal Reserve Chairman Ben Bernanke indicated that the Fed will lower rates further if financial conditions and the availability of credit deteriorate.

Also in the minutes, the Fed termed the inflation statistics since the end of the year, "disappointing." The Fed now expects 2008 core inflation of 2.0-2.2%, up from the previous 1.7-1.9% estimate.

Further, the Fed lowered its 2008 U.S. GDP outlook to 1.3-2.0% from the earlier 1.8-2.5%.

Continue reading Despite inflation, Fed says 'relatively low' interest rates necessary 'for a time'

Despite inflation, Fed says 'relatively low' interest rates necessary 'for a time' originally appeared on BloggingStocks on Wed, 20 Feb 2008 18:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Bernankebond marketCPIcredit marketsenergyFedfoodforeclosuresGDPhousinginflationinterest ratesinthenewsmonetary policyMonetaryPolicyoilOPECterm auction facilityTermAuctionFacilityU.S. economyU.S. Federal ReserveWed, 20 Feb 2008 18:30:00 EST<![CDATA[Fed may cut rates again to lower borrowing costs for corporations, households]]>http://www.bloggingstocks.com/2008/02/13/fed-may-cut-rates-again-to-lower-borrowing-costs-for-corporation/http://www.bloggingstocks.com/2008/02/13/fed-may-cut-rates-again-to-lower-borrowing-costs-for-corporation/http://www.bloggingstocks.com/2008/02/13/fed-may-cut-rates-again-to-lower-borrowing-costs-for-corporation/#commentsFiled under: ,

The Fed may have to lower interest rates again because previous cuts have failed to lower borrowing costs for many corporations and households, Bloomberg News reported Wednesday.

Despite 125 basis points of rate reductions by the Fed over a nine day span in January 2008, companies are paying more to borrow now than before the cuts, data compiled by Merrill Lynch (NYSE: MER) indicated, Bloomberg News reported.

Further, banks have been forced to abandon loan sales, student loan enterprises have had to postpone auctions, and even major municipalities have had to increase the interest rate they offer on bonds to attract investors reluctant to take on additional debt instruments amid subprime asset defaults and constrained credit market conditions. Economist David H. Wang told BloggingStocks Wednesday in a normal market the Fed's rate cuts would have lowered short-term borrowing costs and enhanced liquidity. It has not happened, which all but guarantees another rate cut by the Fed on March 18.

"We're definitely going to need another shot [interest rate cut]," Wang said. "The only question now is whether the Fed goes 25 basis points or 50. Credit market conditions are way too constrained. It's one thing to have a bond deal on a young company deferred or priced differently on risk factors, but this business of Sallie Mae's auctions failing to generating interest is just a ridiculous situation, frankly. It shows just how irrational the market has become, short-term."

Continue reading Fed may cut rates again to lower borrowing costs for corporations, households

Fed may cut rates again to lower borrowing costs for corporations, households originally appeared on BloggingStocks on Wed, 13 Feb 2008 18:20:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>bond insurersbond marketcredit marketsFedGDPinterest ratesinthenewsmonetary policyterm auction facilityU.S. economyU.S. Federal ReserveWed, 13 Feb 2008 18:20:00 EST<![CDATA[Economist says months, not weeks, needed to gauge effectiveness of Fed's rate cuts]]>http://www.bloggingstocks.com/2008/02/11/economist-says-months-not-weeks-needed-to-gauge-effectiveness/http://www.bloggingstocks.com/2008/02/11/economist-says-months-not-weeks-needed-to-gauge-effectiveness/http://www.bloggingstocks.com/2008/02/11/economist-says-months-not-weeks-needed-to-gauge-effectiveness/#commentsFiled under: , ,

As the saying goes, what if you invited everyone to a party and no one showed up?

That's a little like how the U.S. Federal Reserve feels right now. The Fed has lowered benchmark, short-term interest rates substantially - - including 125 basis points of reduction in January 2008 alone - - but so far, banks, stung by subprime losses, have been reluctant to ramp-up lending, CNBC.com reported Monday.

Patience advised

Still, economist David H. Wang took issue with those arguing that the Fed's rate cuts and ongoing term auction facility that haven't worked or weren't needed.

Concerning rate cuts, Wang told BloggingStocks Monday that the banking sector had to work through "a period of loan fright" - - an irrational fear of risk - - that is, in his view, the additive inverse of "the total neglect of risk" that characterized the earlier housing boom.

"Banks need some time to improve their balance sheets. Some may accomplish this through job cuts and by operational cut-back. Many will accomplish this through curtailed lending and tighter lending standards, at least for a short period of time," Wang said. "But in time, lending to businesses and individuals will resume its normal pace."

'Gradualism' vs. shock therapy

Second, the Fed's term auction facility - - which U.S. Federal Reserve Chairman Ben Bernanke has said will remain in operation "for as long as necessary" - - is working. "The term auction facility is doing exactly what it's supposed to do... it's providing short-term loans to banks who need it, who don't want to borrow from the discount window and who can't get the money from other banks who are afraid to lend," Wang said. "And in the process, bank operations are maintained, even as they slowly and gradually digest subprime defaults and related asset write-offs."

And that last point may be the key to understanding the outlook for a resumption of normal lending conditions, he said. Given the size of likely, problematic subprime loans - - some have put the figure at $500 billion - - and the preference for gradualism, it may be two quarters or more before normal lending conditions resume. Further, the correct place to look for the start of increased lending is not the stock market's level, but commercial activity: orders for new equipment, business expansion plans, and job growth / new hiring announcements.

And while some economists argue that it would be better if the financial services sector wrote-off problem loans quicker - - i.e. 'the sooner the better for economy,' Wang does not agree.

"Shock therapy may have worked in Poland's transition from a communist centrally-planned economy to a free-market economy but we're dealing with a magnitude difference in money here," Wang said with chuckle. "The Fed's goal here is to enable banks to gradually work the bad loans out the system, while maintaining the conditions for sustainable economic growth and not causing runaway inflation. And so far, that strategy is working, in my interpretation."

Continue reading Economist says months, not weeks, needed to gauge effectiveness of Fed's rate cuts

Economist says months, not weeks, needed to gauge effectiveness of Fed's rate cuts originally appeared on BloggingStocks on Mon, 11 Feb 2008 17:18:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Bernankecommercial bankingFedGDPinterest ratesloansmonetary policyPolandsubprime loansterm auction facilityU.S. economyU.S. Federal ReserveMon, 11 Feb 2008 17:18:00 EST<![CDATA[Treasury yields suggest U.S. economy should rebound before election]]>http://www.bloggingstocks.com/2008/02/11/treasury-yields-suggest-u-s-economy-should-rebound-before-elect/http://www.bloggingstocks.com/2008/02/11/treasury-yields-suggest-u-s-economy-should-rebound-before-elect/http://www.bloggingstocks.com/2008/02/11/treasury-yields-suggest-u-s-economy-should-rebound-before-elect/#commentsFiled under: , , ,

The U.S. economy could be growing faster before the inauguration of the new U.S. president. Bloomberg News reported Monday.

The forecast is based on the rise in the 5-year U.S. Treasury yield from its lowest level relative to the 2- and 10-year notes since 2001. The last two times that occurred, during the 1990 and 2001 recessions, the economy started to expand within nine months.

Famous last words

Economist David H. Wang agreed that the indicator has accurately predicted previous recoveries. "It's been an accurate indicator, famous last words," Wang told BloggingStocks Monday.

However, Wang cautioned that the nation's public officials, corporate America and individuals can't overlook, or neglect to prepare for, what's in-between.

Continue reading Treasury yields suggest U.S. economy should rebound before election

Treasury yields suggest U.S. economy should rebound before election originally appeared on BloggingStocks on Mon, 11 Feb 2008 13:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>bond marketbondscredit marketsfiscal policyGDPinthenewsmonetary policyterm auction facilityU.S. CongressU.S. economyU.S. Federal ReserveU.S. Treasury notesyield curveMon, 11 Feb 2008 13:30:00 EST