LIBOR Changes
TBA May 30th, according to Angela Knight, CEO of the BBA.
Exchange-Traded Credit Default Swaps ?
I would vote for that but will be difficult. For a spread, there is more than one price and for a price there is more than one spread.
The price of a CDS is always uncertain. There is no single answer, CDS trade on “spreads” but the price depends on models and inputs. To quote a famous textbook exemple, suppose that you bought protection on Marconi at 250 bp sometimes in the late 90s, in 2001 the spread had widened to 4000 bp. You are rich or so you think. The unwind price depends entirely on recovery assumptions, at 30% recovery you would get 51% of par, at 99% you would get 1% of par, that is you would “lose” even though you got the scenario right.
Felix Salmon: Moving Towards Exchange-Traded Credit Default Swaps
A Wish List for Fixing Wall Street
Liquidity Provision by the Federal Reserve
Ultimately, market participants themselves must address the fundamental sources of financial strains–through deleveraging, raising new capital, and improving risk management–and this process is likely to take some time. The Federal Reserve’s various liquidity measures should help facilitate that process indirectly by boosting investor confidence and by reducing the risks of severe disruption during the period of adjustment. Once financial conditions become more normal, the extraordinary provision of liquidity by the Federal Reserve will no longer be needed. As Bagehot would surely advise, under normal conditions financial institutions should look to private counterparties and not central banks as a source of ongoing funding.
Only in America: Repo Home Tour
Our foreclosure bus tours are every saturday and bus leaves at 11:30a.m. Your just a bus tour away from buying your home . Equity awaits!
The European Central Bank and The Federal Reserve
The Federal Reserve is planning to ask Congress for authority - starting this year - to pay interest on commercial-bank reserves, in an effort to gain better control over interest rates and more leverage to battle the credit crunch.
The ECB has done so from day one. Time will if it will work, I am skeptical.
The big difference between the Fed and the ECB is that the ECB is the ultimate top credit within Euroland something that the Fed is not and in a flight to quality the ECB minimum deposit rate acts as a floor for interest rates, something that may not work for the Fed. I have mentionned somewhere that in Euroland it is not possible to have negative repos rates or government t-bills trading below the minimum deposit rate.
The European Central Bank and The Federal Reserve: paper by Stephen G. Cecchetti and Róisín O’Sullivan
Fed seeks approval to pay interest on reserves: report
FED: Running Out of T-Bills
By my calculation, the Fed has only about $55 bn in T-Bills left in stocks, down from $275 bn one year ago.