RSS feedMoney market funds
’The perils of releasing the repo rate
FT Alphaville speculated this week about the degree to which collateralised gold loan rates are more indicative of real repo rates - and of collateralised borrowing costs overall – than general collateral repo rates.
Finreg, the FDIC and repo markets: a BarCap primer
BarCap produced another solid batch of commentary on the potential implications of US financial reform on Friday*, this time on the topic of repo and short-rate markets.
[For any interested, previous missives covered derivatives/central clearing and the resolution authority]
Here’s the I-want-to-leave-the-office version:
Cosmic European commercial paper
There’s been much focus on surging Libor of late, but there’s another (sky-high) money market indicator to focus on.
The rate for 30-day European Commercial Paper (ECP) has surged in recent days, jumping 14 basis points this week to 48bps.
Beware the ides of money funds, Libor
Libor laments notwithstanding, this was a big jump on Tuesday:
RTRS-LIBOR THREE-MONTH DOLLAR RATES FIX AT 0.53625 PCT VS 0.50969 PCT ON MONDAY -BBA
11:56 25May10 RTRS-LIBOR THREE-MONTH EURO RATES FIX AT 0.63875 PCT VS 0.63438 PCT ON MONDAY -BBA
11:56 25May10 RTRS-LIBOR THREE-MONTH STERLING RATES FIX AT 0.70813 PCT VS 0.70188 PCT ON MONDAY -BBA
Ouch.
Libor-gazing, counterparty-casing
Does anyone remember Libor?
The London Interbank Offered Rate, the reported cost of borrowing between banks, has fallen by the wayside a bit since it shot to infamy — and a record high — in October 2008,
A discreet draining operation?
And we aren’t talking about Dyna-Rod here.
But this, which is hot off the John Kemp wire at Reuters:
TREASURY SAYS TO RESUME SUPPLEMENTARY FINANCING PROGRAM FOR FED
TREASURY SAYS EXPECTS BALANCE IN SFP TO INCREASE TO $200 BILLION FROM CURRENT $5 BILLION LEVEL
TREASURY SAYS AUCTIONS WILL BE IN FORM OF EIGHT $25 BILLION,
Repairing the buck
Horses and stable doors spring to mind (inevitably), but the SEC has finally come up with a series of new rules for money market funds in the US in the hope that we do not see a re-run of the Reserve Primary Fund debacle.
T-bill terror
Duh duh duh!
The yield on some short-term Treasuries, T-bills, turned negative on Thursday. That means that investors are piling into Treasuries to such an extent that they’re now willing to effectively pay the government for the benefit of owning them.
When the facts change, change the measures (and hope for the best)
Sean Corrigan of Diapason Commodities — ever cautious on inflation – is unsurprisingly also a bit of a money-supply fiend. The issues of monetary base, M2, M4, and all other definitions thereof, frequently make a prominent appearance in his research notes.
Money market datapoint(s) du mois
Bank of America Merrill Lynch analyst Hans Mikkelsen has drilled down into recent outflows from money market funds (a topic which had attracted its fair share of conspiratorial theorising).
According to Mikkelsen’s,
Where’s the money (market funds)?
David Galland, of Casey Research, is long on conspiracy in his Pragmatic Capitalist article on money market funds.
Let’s be clear. The US Treasury has not suddenly decided to withdraw its guarantee on money market funds (MMFs) — the guarantee was due to expire on September 18,
Buck-ling money market funds
Here’s a novel solution to the problem of money market funds `breaking the buck’ in periods of financial stress and low interest rates — get rid of the `buck.’
From the Wall Street Journal:
A year after a money-market fund spooked investors by “breaking the buck,”
Sympathy for the money market funds
What’s this? Obama’s economic adviser and former Fed chairman Paul Volcker wants to regulate money market funds like banks.
Via Bloomberg:
Aug. 25 (Bloomberg) — Paul Volcker, the former Federal Reserve chairman who is an adviser to President Barack Obama,
The Kanjorski meme and the end of the world, redux
It looked on Wednesday last week like Felix Salmon had had the last word on what he earlier dubbed the Kanjorski meme – a little piece of web flotsam alighted upon by a number of blogs, among them FT Alphaville – the gist of which went something like this:
Slow road to recovery
The most obvious and immediate casualty of the Lehman collapse was thefall of Reserve Primary, and with it, the Prime Money Market – Money Market funds investing in commercial paper such as that issued by banks.
Of money market funds and treasuries
Things like this, from today’s FT, confuse us:
Money market funds, an increasingly popular place to park cash, will need to raise fees or close to new money to remain profitable as yields hover at near-zero,