Markets News Regulators 

Confusion around Fed’s Clarida speech throws off investors

“This was later corrected, saying that the central bank would only focus on bills” writes Sunny Oh for marketwatch.com. A scheduled speech by Federal Reserve Vice Chairman Richard Clarida ended up throwing off bond investors on Friday who saw headlines suggesting the central bank had made a sudden tweak to how it would expand the U.S. central bank’s $3.6 trillion balance sheet.New York Fed President John Williams had said on Thursday that the central bank would only buy T-bills, but that it could acquire short-term coupon-bearing securities later.The text of…

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Markets News 

Funding market strains resurface as repo rates stay elevated

“The overnight repo rate spiked as high as 2.26%, according to one estimate” writes Sunny Oh for marketwatch.com. The repo rate usually closely tracks the central bank’s benchmark interest rate as they both are considered sources of short-term borrowing.This compared with the effective fed funds rate, which stood at 1.90% on Oct. 15.Strains in short-term lending markets popped up again on Wednesday as the cost of borrowing funds overnight in return for high-quality collateral, or the repo rate, shot up on Wednesday.Hedge funds and banks use the repo market to…

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Powell sees cooler US hiring in possible hint of rate cuts

“In his speech, Powell also said the Fed plans to renew its Treasury security purchases to pump more cash into overnight money markets” reports thebusinessjournal.com. That step is intended to help keep short-term rates at their target level and isn’t needed to support the economy, the Fed chairman added.Corporate tax payments due at the end of the quarter and bond sales by the federal government had soaked up enough cash to send the overnight rates sharply higher. Source: thebusinessjournal.com

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Japan’s Abe says expects BOJ to weigh benefits, costs in deciding policy

“TOKYO (Reuters) – Japanese Prime Minister Shinzo Abe said on Tuesday he expects Bank of Japan Governor Haruhiko Kuroda to make an appropriate decision on monetary policy while weighing the benefits and costs of each step” writes Midwest Communications Inc for 95kqds.com. Abe made the remark in parliament, when asked about the possibility the BOJ may loosen monetary policy further by deepening negative interest rates. Under a policy dubbed yield curve control (YCC), the BOJ pledges to guide short-term rates at -0.1% and the 10-year government bond yield around 0%. Source:…

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Markets News 

S&P 500 on the verge of ending below its 50-day moving average for first time in about a month

“The S&P 500 index was falling sharply lower Tuesday afternoon, along with the broader market in the first trading day in October, with the large-cap stock benchmark on the brink of finishing below its short-term moving average for the first time since early September” writes Mark Decambre for marketwatch.com. The S&P 500 SPX, -0.98% was down 1.1% at 2,942.91, in most recent action, trading below its 50-day moving average at 2,948.09.Stock-market analysts use moving averages as a demarcation line between bullish and bearish trends in an asset. Meanwhile, the broader…

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Fed’s struggles with funding in banking system highlights fragility of Wall Street confidence

“However, Wall Street may be the most keenly attuned to the internal workings of the arcane short-term funding in the hope that it resumes being mundane” writes Sunny Oh for marketwatch.com. When corners of the financial markets that are typically considered mundane draw outsize attention on Wall Street, it is always cause for investor concern.The spike in borrowing costs saw investors clamoring for intervention to ease strains in funding markets.Rates on short-term funds, that are typically anchored to fed-funds rates, briefly became unhinged, spiking to nearly 10% on Tuesday. Source: marketwatch.com

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Markets News Regulators 

The fragility of Wall Street confidence highlighted by Fed’s struggles with banking system funding

“However, Wall Street may be the most keenly attuned to the internal workings of the arcane short-term funding in the hope that it resumes being mundane” writes Sunny Oh for marketwatch.com. When corners of the financial markets that are typically considered mundane draw outsize attention on Wall Street, it is always cause for investor concern.The spike in borrowing costs saw investors clamoring for intervention to ease strains in funding markets.Rates on short-term funds, that are typically anchored to fed-funds rates, briefly became unhinged, spiking to nearly 10% on Tuesday. Source: marketwatch.com

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U.S. dollar to be main currency underpinning Facebook’s Libra: Spiegel

“Facebook’s planned Libra is the most well-known of the stablecoins, cryptocurrencies backed by assets such as traditional money deposits, short-term government securities or gold” writes Midwest Communications Inc for 95kqds.com. BERLIN (Reuters) – The U.S. dollar will make up 50% of the basket of currencies backing Facebook’s planned digital coin Libra, with the euro, yen, sterling and Singapore dollar comprising the rest, Der Spiegel reported, referring to a letter from Facebook.The Swiss-based Libra Association, the non-profit organization comprising Facebook and 27 other members that plans to launch and oversee the…

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House passes short-term funding measure to avert October shutdown

“The standoff over wall funding last year resulted in a 35-day shutdown that lasted into 2019, and an impasse over wall funding this fall will likely increase the chances of another shutdown in November” writes Rebecca Shabad for nbcnews.com. “Our continuing resolution will provide families, businesses, and communities with budget certainty while we negotiate long-term funding. Source: nbcnews.com

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Fed rushes to plug cash shortage in short-term loan market

“The Fed took action after interest rates spiked in a market for funds known as the repo market” writes The Associated Press for seattletimes.com. This marks the Fed’s first major operation in the repo market since the crisis.This market allows companies that own lots of securities to gain cash when they need it at cheap rates.The repo market describes billions of dollars of daily operations in which one party lends out cash in exchange for a roughly equivalent value of securities, usually Treasury notes.Deborah Cunningham, chief investment officer of global…

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