Bloomberg gives today’s sighting on money market conditions. Rates continue to improve but remain at elevated levels: Money-market rates in London dropped as cash injections by central banks and the prospect of deeper reductions in borrowing costs worldwide showed signs of revitalizing confidence in lending. The London interbank offered rate, or Libor, that banks charge […]
Read more...This informative discussion that sheds further light on the stresses created by credit default swap settlements comes in the current issue of the Institutional Risk Analytics weekly, “In the Fog of Volatility, the Notional Becomes Payable“: Another example of the ongoing discontinuity in the markets comes in the linkage between the unwind of credit default […]
Read more...This Bloomberg article treats as a news item the fact that the Treasury is focusing its equity infusion efforts on strong banks, leaving the rest to find their own exit strategy. But this approach is not surprise; in fact, it is exactly what Treasury said it would do in a conference call to analysts exactly […]
Read more...Consumers are in a newly austere mood, and those who have lived beyond or at the edge of their means may be forced to retrench whether they want to or not. The New York Times reports that credit card issuers are cutting back on their lines of credit and special offers. Since debt-fueled consumer spending […]
Read more...In a bit of synchronicity, it seems that some mainstream commentators are starting to to take interest in a topic we’ve commented on in recent weeks, namely, how the difficulty in getting letters of credit is playing a significant role in the contraction in international trade (see our related post earlier today). John Dizard in […]
Read more...While none of the changes in interest rates were dramatic, and both interbank rates and stress levels remain elevated, improvement continues and all the metrics moved in the right direction. From Bloomberg: Money-market rates in London declined as cash injections by European central banks showed signs of easing the paralysis among lenders. The London interbank […]
Read more...I somehow managed to fail to connect the dots on this one. When Morgan Stanley and Goldman, the far and away two biggest prime brokers (as in lenders to hedge funds) became banks, tougher regulatory requirements forced them to curtail hedge fund lending significantly. To give you an idea of the concentration in this business, […]
Read more...One of our pet themes in recent weeks is that the fall in trade traffic, indicated and possibly overstated by a dramatic fall in the Baltic Dry Index, is due at least in part to difficulties in arranging and getting other banks to accept buyers’ letters of credit. For those new to this topic, international […]
Read more...The Japanese stock market was in positive territory for a while, then bobbled between up and down versus the Friday close, and has now taken a nosedive, down over 6%. Most other Asia-Pacific markets showed large losses save Australia, which was down a comparatively modest 1.5%ish. The yen is now (3:00 AM) just above 93 […]
Read more...Morgan Stanley’s money market funds were hit by major redemptions in September, and the firm stepped in to fund half of the withdrawals itself, presumably out of a view that selling the underlying fund assets into a deteriorating market would only lead to distressed prices. But one has to wonder whether the positions that Morgan […]
Read more...Large current account surpluses do not mean a country’s are on a sound footing, as Japan, China, and now the Gulf States illustrate. A big bank near-failure in Kuwait has led the central bank to mount a rescue plan, and is weighting guaranteeing bank deposits. As the example of Ireland showed, bank guarantees (when stronger […]
Read more...Having worked for Goldman (admittedly many years ago, although by all accounts the culture has not changed much) and had Citi as a client, the two firms would not have made for an easy marriage. And it’s a given that the Goldman side would assume, as when commodities giant Phibro acquired Salomon Brothers in the […]
Read more...We have noted before that the officialdom in the US has been remarkably less than candid (one might say outright dishonest) in discussing the likely trajectory of the financial crisis and economic growth. No one is willing to state the obvious, for instance, that banking crises lead to reductions in living standards, even though consumers […]
Read more...Hyperbole has become a mainstay of discourse in the US. The upcoming financial summit set for November 15 in Washington DC is being wrapped in the Bretton Woods brand, when it appears to be a different sort of beast. As a Wall Street Journal story reminds us, Bretton Woods was a three week session among […]
Read more...Ah, when you thought the news from equity markets was bad enough, we get a second helping on the interbank front. From Bloomberg: The cost of borrowing in dollars overnight in London rose as the increased likelihood of a global recession spurred banks to hoard cash even after policy makers pumped record amounts of the […]
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