The trend in Libor is clearly down. Three-month Libor, for example, has fallen about 75 basis points in two weeks. At today's setting, three-month Libor was unchanged at 1.46625%, a four-year low. Settings for other terms increased between 1 and 3 basis points. The settings for the euro and the British pound were lower across all maturities, reinforcing the recent trend.
For today's dollar setting, it is possible that year-end pressures played a role. At year's-end, there are pressures related to rollover funding and window dressing.
The Fed has and is expected to provide massive liquidity to keep year-end pressures at bay. For example, the Fed on Nov. 24 conducted a 13-day forward auction for $150 billion of funding covering the period Dec. 23 through Jan. 5. Banks bid for $31 billion of the money at a rate of 0.38%. The fact that much less of the money was taken than was offered suggests year-end pressures will not be substantial.
P.S. Will you be there when Cramer makes his next move?
Strong brands and companies with vast market exposure can help bolster your portfolio. Jim was able to lock in a 64% gain by buying Ingersoll-Rand at $13 and selling at $22.50. Action Alerts PLUS members were the first to see these moves. Were you among them? Get Free Access Today!
Tony Crescenzi Blog Corporate Bonds Gain 12/22/2008 2:10 PM EST The improvement was sparked in part by the Fed's zero interest rate policy .
Tony Crescenzi Blog Banks Dump Securities 12/22/2008 12:23 PM EST Can lending be far behind?
Tony Crescenzi Blog Banks Sitting On $1 Trillion Cash 12/22/2008 10:50 AM EST Pre-Lehman, cash balances tended to hover around $300 billion.
Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of the revised investment classic, The Money Market,
first published in 1978 by Marcia Stigum, and The Strategic Bond Investor. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of Bondtalk.com, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.
TheStreet.com has a revenue-sharing relationship with Trader's Library under which it receives a portion of the revenue from purchases by customers directed there from TheStreet.com.
RSS FEEDS
PODCASTS
