Bund Tbond and the bernakka's und trikeko's injection VM199 (6 lettori)
- Creatore Discussione gipa69
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masgui
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dai che oggi voglio arrivare a 1000 messaggisssss......
gipa69
collegio dei patafisici
In this note, we present a selection of street views on the 50bp cut in the Fed Discount rate:
SEB - News Comment (17 August)
The Discount window is always open for financial institutions to borrow in against a broad range of collateral, including home mortgages, but the 50 bp clearly cheapens this financing option and should thus work to free up the bind where liquidity injections did not flow through the system to the institutions in need of funding. By cutting the Discount rate rather than the Fed Funds target, the Fed addresses the root of the problem rather than just provide everyone with easier credit.
In the attached statement, the Fed moves beyond financial market conditions as explanation for the action and also changes their forward bias to be risks to growth rather than the inflation concern which has prevailed so far. In our view, this is likely to set the stage for a 25 bp cut in the Fed Funds rate on September 18.
The clear action from the Fed and the explicit promise to do more if needed is good news. It is likely to provide equity markets with the breathing room needed to once again look at fundamentals rather than be ruled by fear.
Dresdner Kleinwort - US Economics Research (17 August)
It took a lot for the Bernanke Fed to take these actions today. The current members of the FOMC have a strong academic bent. They believe the “credibility” of their determination to control inflation is important and that they should only change policy when actual developments turn out to be different from their expectations for growth and inflation. There was almost nothing in their playbook about how to respond to a “liquidity crisis” of the sort that has unfolded.
The FOMC has taken another incremental step to what we believe will be an eventual easing of its fed funds rate target in September. Policymakers have come to feel that the potential negative consequences for the economy from the ongoing credit crunch are severe enough to overcome their concerns about moral hazards and protecting their credibility as inflation fighters.
The Fed has always understood the nature of this “liquidity crisis.” There were too many people or financial institutions that lent money on too easy terms to borrowers who now cannot repay. There will be losses and those losses have to be absorbed. But in many cases the lenders are in leveraged positions, which simply means that there are other lenders who are facing unexpected losses. As more institutions report losses, confidence in counterparties evaporates. No one wants to lend to anyone else. Yield spreads widen, driving down asset prices and making the situation worse. Assets cannot be sold at reasonable prices, and leveraged investors become insolvent. Losses start to spread out, confidence in counterparties declines further, and the downward spiral continues.
“Good” credits get trampled underfoot as well as bad credits. The good credits need a lender of last resort. The Fed can only lend directly to banks. The good credits should be able to go to their banks to get funding that they can no longer get in the market (say through commercial paper borrowing). The banks in turn get their funding from the Fed.
Merrill Lynch - The Market Economist (17 August)
Very little borrowing is actually done at the discount window – in fact, in the week ending August 15, on average there was $271 million of such borrowing conducted versus $258 million for all of July. The discount rate is still 50 basis points above the overnight rate; and while the Fed extended the borrowing period to 30 days, the discount rate is still at a 25 basis point “penalty” relative to 1- month Libor. Clearly the Fed is trying to entice institutions that cannot access funds in the marketplace to borrow from the discount window – maybe in order to gain information as to who is really in trouble from a funding standpoint.
… we have never seen the Fed cut the discount rate this muchwithout a change in the funds rate, so clearly it is trying to send a message to the markets without having to imply that it is panicking. Talk about walking a fine line. … in contrast to that some believe, the Fed has not lowered the credit standards on collateral that it will accept, in other words the collateral base has NOT been expanded. However, as is always the case, the Fed by definition accepts a wider base of collateral at the discount window than it does in its repo operations.
We think that today’s discount rate cut is mostly symbolic in nature (though companies such as Countrywide through the bank counterparts are allowed to borrow at the discount window). The real message is in the press statement today which is vastly different from what we saw last week at the post-meeting statement. Not a word about inflation this time.
… in our view, it is highly likely that the Fed will cut rates by or at the next meeting, and by 50 basis points since a 25 basis point would risk a market backlash. There is too much time between that meeting on September 18 and the next confab at the end of October.
There has never been an asset and credit bubble that managed to unwind in an orderly fashion, and the historical record shows is that the Fed spends the first half of the rate-cutting cycle running backward on the treadmill. It’s not until the second half of the easing cycle that the clouds really begin to part. We recall all too well when the Fed pulled that surprise rate cut on January 3 2001 when it cut BOTH the discount and the funds rate by 50 basis points (the Fed cut both the discount rate 25 bps that day and 25 bps the following day), the Dow surged 300 points or 2.8% and the NASDAQ soared 14% that day. Three months later, both were hitting new lows.
UBS - US Economic Perspectives (17 August)
To a large extent, the 50 bp cut in the discount rate announced by the Federal Reserve on August 17 is more of a token move than a true easing. Nonetheless, it shows concern about recent financial sector turmoil and increases the likelihood the Federal Open Market Committee (FOMC) will formally cut the funds rate at the September 18 meeting, and sooner, if necessary. We continue to forecast a 50 bp decline in the funds rate this year, to 4.75%. However, following the August 17 announcement, we changed our forecast to show 25 bp easings at the September 18 and October 30-31 meetings—instead of at the October 30-31 and December 11 meetings. We still expect the Fed to move in 25 bp increments but there is clearly a risk of a 50 bp first move.
We believe an easier monetary policy can be successful in heading off the potentially recessionary effects of the evolving U.S. credit market crunch. However, credit problems will play a role in slowing H207 real GDP expansion to around our longstanding 1.7% growth forecast, which was a full percentage point under the early August Blue Chip consensus. However, we would not place more than a 1 in 5 subjective probability that slow H207 growth degenerates into a recession in 2008, when we expect somewhat better 2.6% growth.
Barclays Capital - Global Economics Daily (17 August)
By taking this action, the Fed is attempting to address the lack of liquidity in financial markets, but is attempting to avoid unnecessarily stimulating the overall economy and increasing inflation risks by cutting the federal funds rate. We believe the Fed would prefer not to lower the federal funds rate because of its concern about inflation risks, but the accompanying statement makes clear that if financial market conditions continue to deteriorate in a way that it believes threatens overall economic growth, the Fed would be prepared to lower rates. With this statement, we believe the Fed has effectively changed to an easing bias. Whether the Fed acts on that bias, either before or at the September meeting, will likely depend on whether financial conditions improve or deteriorate in the weeks ahead. We continue to expect the FOMC to keep the federal funds rate unchanged in the near term.
ABN - Global FX Daily (20 August)
Very few banks use the discount window, in part because of the premium over the fed funds rate that is charged by one bank lending to another, and in part because of the stigma of doing so. Banks need to post collateral to borrow at the discount window and the normal borrowing arrangement is overnight. The Fed reiterated in its statement announcing the discount cut that it will accept mortgages and mortgage-backed securities as collateral. This statement may ease some of the stigma of such securities marginally. The Fed also said it was open to lending for 30 days, which reduces uncertainty about rollover risk in general. Only banks can access the discount window. Mortgage and finance companies cannot. But those entities can borrow from banks, for perhaps 6.25%, and then the banks can borrow from the Fed at 5.75% if the risk/reward makes sense.
The FOMC also issued an updated view about the economy. It says “the FOMC judges that the downside risks to growth have increased appreciably. The Committee is monitoring the situation and is prepared to act as needed to mitigate the adverse effects on the economy…” I interpret this statement to mean that the FOMC now has an easing bias for the Fed funds rate, which makes it much easier to cut that rate at the next meeting. In fact, the “monitoring” and “as needed” phrases signal a potential willingness to move between meetings. Bernanke may not like market commentators saying this, but this new statement reads like a promise to provide a “Bernanke put” in the future, if needed. I’m calling it a ‘compound Bernanke put’ for now.
Societe Generale (20 August)
The move shows a commitment to restoring liquidity rather than broadly reflating the economy. At the same time, it dampens fed funds rate cut speculation although the Fed will continue to monitor conditions very closely. The next FOMC meeting is September 18th. The outcome depends heavily on how short-term market confidence unfolds. Any rate cuts now would be described as an insurance measure. Conveying some longer term concerns on inflation would be a hint of a policy reversal after the crisis has passed. The pattern would mirror 1987/88 and 1998/99.
SEB - News Comment (17 August)
The Discount window is always open for financial institutions to borrow in against a broad range of collateral, including home mortgages, but the 50 bp clearly cheapens this financing option and should thus work to free up the bind where liquidity injections did not flow through the system to the institutions in need of funding. By cutting the Discount rate rather than the Fed Funds target, the Fed addresses the root of the problem rather than just provide everyone with easier credit.
In the attached statement, the Fed moves beyond financial market conditions as explanation for the action and also changes their forward bias to be risks to growth rather than the inflation concern which has prevailed so far. In our view, this is likely to set the stage for a 25 bp cut in the Fed Funds rate on September 18.
The clear action from the Fed and the explicit promise to do more if needed is good news. It is likely to provide equity markets with the breathing room needed to once again look at fundamentals rather than be ruled by fear.
Dresdner Kleinwort - US Economics Research (17 August)
It took a lot for the Bernanke Fed to take these actions today. The current members of the FOMC have a strong academic bent. They believe the “credibility” of their determination to control inflation is important and that they should only change policy when actual developments turn out to be different from their expectations for growth and inflation. There was almost nothing in their playbook about how to respond to a “liquidity crisis” of the sort that has unfolded.
The FOMC has taken another incremental step to what we believe will be an eventual easing of its fed funds rate target in September. Policymakers have come to feel that the potential negative consequences for the economy from the ongoing credit crunch are severe enough to overcome their concerns about moral hazards and protecting their credibility as inflation fighters.
The Fed has always understood the nature of this “liquidity crisis.” There were too many people or financial institutions that lent money on too easy terms to borrowers who now cannot repay. There will be losses and those losses have to be absorbed. But in many cases the lenders are in leveraged positions, which simply means that there are other lenders who are facing unexpected losses. As more institutions report losses, confidence in counterparties evaporates. No one wants to lend to anyone else. Yield spreads widen, driving down asset prices and making the situation worse. Assets cannot be sold at reasonable prices, and leveraged investors become insolvent. Losses start to spread out, confidence in counterparties declines further, and the downward spiral continues.
“Good” credits get trampled underfoot as well as bad credits. The good credits need a lender of last resort. The Fed can only lend directly to banks. The good credits should be able to go to their banks to get funding that they can no longer get in the market (say through commercial paper borrowing). The banks in turn get their funding from the Fed.
Merrill Lynch - The Market Economist (17 August)
Very little borrowing is actually done at the discount window – in fact, in the week ending August 15, on average there was $271 million of such borrowing conducted versus $258 million for all of July. The discount rate is still 50 basis points above the overnight rate; and while the Fed extended the borrowing period to 30 days, the discount rate is still at a 25 basis point “penalty” relative to 1- month Libor. Clearly the Fed is trying to entice institutions that cannot access funds in the marketplace to borrow from the discount window – maybe in order to gain information as to who is really in trouble from a funding standpoint.
… we have never seen the Fed cut the discount rate this muchwithout a change in the funds rate, so clearly it is trying to send a message to the markets without having to imply that it is panicking. Talk about walking a fine line. … in contrast to that some believe, the Fed has not lowered the credit standards on collateral that it will accept, in other words the collateral base has NOT been expanded. However, as is always the case, the Fed by definition accepts a wider base of collateral at the discount window than it does in its repo operations.
We think that today’s discount rate cut is mostly symbolic in nature (though companies such as Countrywide through the bank counterparts are allowed to borrow at the discount window). The real message is in the press statement today which is vastly different from what we saw last week at the post-meeting statement. Not a word about inflation this time.
… in our view, it is highly likely that the Fed will cut rates by or at the next meeting, and by 50 basis points since a 25 basis point would risk a market backlash. There is too much time between that meeting on September 18 and the next confab at the end of October.
There has never been an asset and credit bubble that managed to unwind in an orderly fashion, and the historical record shows is that the Fed spends the first half of the rate-cutting cycle running backward on the treadmill. It’s not until the second half of the easing cycle that the clouds really begin to part. We recall all too well when the Fed pulled that surprise rate cut on January 3 2001 when it cut BOTH the discount and the funds rate by 50 basis points (the Fed cut both the discount rate 25 bps that day and 25 bps the following day), the Dow surged 300 points or 2.8% and the NASDAQ soared 14% that day. Three months later, both were hitting new lows.
UBS - US Economic Perspectives (17 August)
To a large extent, the 50 bp cut in the discount rate announced by the Federal Reserve on August 17 is more of a token move than a true easing. Nonetheless, it shows concern about recent financial sector turmoil and increases the likelihood the Federal Open Market Committee (FOMC) will formally cut the funds rate at the September 18 meeting, and sooner, if necessary. We continue to forecast a 50 bp decline in the funds rate this year, to 4.75%. However, following the August 17 announcement, we changed our forecast to show 25 bp easings at the September 18 and October 30-31 meetings—instead of at the October 30-31 and December 11 meetings. We still expect the Fed to move in 25 bp increments but there is clearly a risk of a 50 bp first move.
We believe an easier monetary policy can be successful in heading off the potentially recessionary effects of the evolving U.S. credit market crunch. However, credit problems will play a role in slowing H207 real GDP expansion to around our longstanding 1.7% growth forecast, which was a full percentage point under the early August Blue Chip consensus. However, we would not place more than a 1 in 5 subjective probability that slow H207 growth degenerates into a recession in 2008, when we expect somewhat better 2.6% growth.
Barclays Capital - Global Economics Daily (17 August)
By taking this action, the Fed is attempting to address the lack of liquidity in financial markets, but is attempting to avoid unnecessarily stimulating the overall economy and increasing inflation risks by cutting the federal funds rate. We believe the Fed would prefer not to lower the federal funds rate because of its concern about inflation risks, but the accompanying statement makes clear that if financial market conditions continue to deteriorate in a way that it believes threatens overall economic growth, the Fed would be prepared to lower rates. With this statement, we believe the Fed has effectively changed to an easing bias. Whether the Fed acts on that bias, either before or at the September meeting, will likely depend on whether financial conditions improve or deteriorate in the weeks ahead. We continue to expect the FOMC to keep the federal funds rate unchanged in the near term.
ABN - Global FX Daily (20 August)
Very few banks use the discount window, in part because of the premium over the fed funds rate that is charged by one bank lending to another, and in part because of the stigma of doing so. Banks need to post collateral to borrow at the discount window and the normal borrowing arrangement is overnight. The Fed reiterated in its statement announcing the discount cut that it will accept mortgages and mortgage-backed securities as collateral. This statement may ease some of the stigma of such securities marginally. The Fed also said it was open to lending for 30 days, which reduces uncertainty about rollover risk in general. Only banks can access the discount window. Mortgage and finance companies cannot. But those entities can borrow from banks, for perhaps 6.25%, and then the banks can borrow from the Fed at 5.75% if the risk/reward makes sense.
The FOMC also issued an updated view about the economy. It says “the FOMC judges that the downside risks to growth have increased appreciably. The Committee is monitoring the situation and is prepared to act as needed to mitigate the adverse effects on the economy…” I interpret this statement to mean that the FOMC now has an easing bias for the Fed funds rate, which makes it much easier to cut that rate at the next meeting. In fact, the “monitoring” and “as needed” phrases signal a potential willingness to move between meetings. Bernanke may not like market commentators saying this, but this new statement reads like a promise to provide a “Bernanke put” in the future, if needed. I’m calling it a ‘compound Bernanke put’ for now.
Societe Generale (20 August)
The move shows a commitment to restoring liquidity rather than broadly reflating the economy. At the same time, it dampens fed funds rate cut speculation although the Fed will continue to monitor conditions very closely. The next FOMC meeting is September 18th. The outcome depends heavily on how short-term market confidence unfolds. Any rate cuts now would be described as an insurance measure. Conveying some longer term concerns on inflation would be a hint of a policy reversal after the crisis has passed. The pattern would mirror 1987/88 and 1998/99.
Fleursdumal
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masgui ha scritto:
5 pagine piene di gnokka e ci sei
oggi consolidano
Fleursdumal
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in effetti lì stanno pazziando, sui fedfunds dicembre scontano tassi al 4,5% per fine anno
