an update on currency, and central bank news:
Dollar Falls on Speculation Fed Will Reduce Interest Rates By Bo Nielsen and Aaron PanAug. 21 (Bloomberg) -- The dollar fell against the euro and yen as tradersincreased bets the Federal Reserve will reduce its target rate forovernight lending between banks. The U.S. currency erased earlier gains before Federal Reserve Chairman BenS. Bernanke and Treasury Secretary Henry Paulson's meeting today withSenate Banking Committee Chairman Christopher Dodd to discuss ``ongoingturmoil'' in the markets.
Interest rate futures show traders see a 96percent chance the Fed will lower its target rate to 4.75 percent from5.25 percent by Sept. 18, up from 70 percent yesterday. ``The Fed must cut rates to keep the economy going,'' said Jason Schenker,an economist in Charlotte, North Carolina, at Wachovia Corp. ``Ifbusinesses are spooked and pull back from investing as a result of highercost of capital, then you will see jobs slow and the economy cool down.'' The dollar fell 0.14 percent to $1.3493 at 9:28 a.m. in New York.
The U.S.currency fell 0.44 percent to 114.37 yen. Schenker expects two Fed rate cuts to 4.75 percent by year- end comparedwith his forecast of none a few weeks ago. He predicts the dollarweakening to $1.4 versus the euro as the European Central Bank maintainsits key rate at 4 percent. The Fed on Aug. 17 reduced the rate it charges banks for direct loans by0.5 percentage point to 5.75 percent, the first cut in borrowing costsbetween scheduled meetings since 2001. The central bank dropped languageindicating a bias toward fighting inflation and highlighted a risingthreat to economic growth.
The euro slid briefly against the dollar earlier after a German reportshowed investor confidence dropped to an eight- month low in August,backing the case for the European Central Bank to delay raising interestrates. The ZEW Center for European Economic Research in Mannheim said its indexof investor and analyst expectations declined to minus 6.9, the lowestsince December, from 10.4 in the previous month. Economists expected adrop to minus 1.5, according to the median forecast of 36 economistssurveyed by Bloomberg News. ``If I could give advice to the ECB, it would be to keep rates stable,''said ZEW President Wolfgang Franz, who is also one of the five economicadvisers to the German government, said today. ``I think they should waituntil this financial market turbulence passes.'' Rising Volatility The yen climbed gained against all of the 16 most actively tradedcurrencies as rising exchange-rate volatility increased the risk of carrytrade purchases of assets with money borrowed in Japan. The yen fell 0.41percent against the euro, after rising as high as 153.52. Japan's currency rallied the most against the Australian dollar asinvestors reduced carry trades. The yield on two-year Treasury notes fellalmost 3 basis points, or 0.03 percentage point, to 4.6 percent today asthe widening credit crunch increased demand for government debt, while therisk of owning corporate bonds rose.
``It's still an environment where risk aversion favors the yen,'' saidMitul Kotecha, head of currency strategy in London at Calyon. ``There'sstill a good feed of bad news filtering into the market, which is leadingto a further deterioration of risk appetite. It's difficult to see thisending anytime soon.'' The pound fell against the dollar and euro on concern the credit-marketcrisis is spreading to the U.K., Europe's second- biggest economy. BOE Loan The Bank of England said today that it loaned 314 million pounds ($628million) from its emergency facility at 6.75 percent, one percentagehigher than the benchmark rate, for the first time since July 17. Odey Asset Management LLP, a London-based hedge fund, said profit fell 69percent, and hedge fund manager Solent Capital Partners LLP said it may beforced to sell assets after it was unable to borrow in thecommercial-paper market yesterday. China raised interest rates for the fourth time since March to cool theworld's fastest-growing major economy after inflation surged to a 10-yearhigh. The benchmark one-year lending rate will increase 0.18 percentage point to7.02 percent tomorrow, the People's Bank of China said on its Web site.The one-year deposit rate will rise 0.27 percentage point to 3.6 percent. The yuan traded at 7.5907 versus the dollar compared with 7.5901yesterday. To contact the reporters on this story: Bo Nielsen in New York atbnielsen4@bloomberg .net ; Aaron Pan in London at apan8@bloomberg. net . Last Updated: August 21, 2007 09:32 EDT ------------ --------- ------------------ --------- ------____________ _________ _________ _________ _________ _________ _
I, alaska joe am not licensed or authorized to provide investment advice. Any statements made herein merely reflect the personal opinions of myself. Please make your own investment decisions based upon your personal circumstances.
Tuesday, August 21, 2007
Monday, August 20, 2007
TSP Transaction Update
Officials to shore up TSP against transaction influxesBy Brittany R. Ballenstedt bballenstedt@ govexec.com August 20, 2007
The current system that processes transactions under the Thrift Savings Plan is capable of handling increased activity from market fluctuations, but will need to be updated, TSP officials said Monday.
At a monthly Federal Retirement Thrift Investment Board meeting, officials overseeing the 401(k)-style retirement plan said that increased volatility in the markets last week led to increased transfers out of the plan's three equity funds -- the common stocks (C), small- and mid-sized companies (S) and international (I) funds. TSP Chief Investment Officer Tracey Ray said the movement generated $9.5 million in trading costs on Thursday alone.
Plan officials said they launched a comprehensive review of the processing system in March, following a market plunge that caused about 10 percent of I Fund investors to make changes.
Executive Director Gregory Long said that analysis and a separate review conducted by IBM found the current mainframe adequate to handle influxes of transactions. But he added that officials are developing a detailed budget plan to update the system and ensure preparedness for major market movements.
"It's not only how we plan for daily events but also for macro events," Long said. "We have put a lot of thought into our budget in planning for those particular events."
TSP officials said in April that the transaction processing system normally operates at about three-fifths of its capacity. Should the market fall significantly, the system could be turned on to full capacity, allowing it to handle four to five times the volume of transactions. Any that exceeded that amount could be delayed.
Long said officials will unveil the budget plan, review fiscal 2007 expenditures and discuss approved fiscal 2008 funding at next month's meeting.
"It's a very tough time to be an investor," FRTIB Chairman Andrew Saul said. "We don't control the markets, but we do have to make sure the participants' money is being handled well and that they have confidence in what we're doing."
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I, Alaska Joe is not licensed or authorized to provide investment advice. Any statements made herein merely reflect the personal opinions of myself. Please make your own investment decisions based upon your personal circumstances.
The current system that processes transactions under the Thrift Savings Plan is capable of handling increased activity from market fluctuations, but will need to be updated, TSP officials said Monday.
At a monthly Federal Retirement Thrift Investment Board meeting, officials overseeing the 401(k)-style retirement plan said that increased volatility in the markets last week led to increased transfers out of the plan's three equity funds -- the common stocks (C), small- and mid-sized companies (S) and international (I) funds. TSP Chief Investment Officer Tracey Ray said the movement generated $9.5 million in trading costs on Thursday alone.
Plan officials said they launched a comprehensive review of the processing system in March, following a market plunge that caused about 10 percent of I Fund investors to make changes.
Executive Director Gregory Long said that analysis and a separate review conducted by IBM found the current mainframe adequate to handle influxes of transactions. But he added that officials are developing a detailed budget plan to update the system and ensure preparedness for major market movements.
"It's not only how we plan for daily events but also for macro events," Long said. "We have put a lot of thought into our budget in planning for those particular events."
TSP officials said in April that the transaction processing system normally operates at about three-fifths of its capacity. Should the market fall significantly, the system could be turned on to full capacity, allowing it to handle four to five times the volume of transactions. Any that exceeded that amount could be delayed.
Long said officials will unveil the budget plan, review fiscal 2007 expenditures and discuss approved fiscal 2008 funding at next month's meeting.
"It's a very tough time to be an investor," FRTIB Chairman Andrew Saul said. "We don't control the markets, but we do have to make sure the participants' money is being handled well and that they have confidence in what we're doing."
__._,_.___
I, Alaska Joe is not licensed or authorized to provide investment advice. Any statements made herein merely reflect the personal opinions of myself. Please make your own investment decisions based upon your personal circumstances.
Action in Treasuries
The following is an updated article of interest to bond fund (F) holders; remember as yields fall bond prices rise:
Treasury Bill Yields Fall Most Since 1987 on Money Fund Demand
By Deborah Finestone and Elizabeth Stanton
Aug. 20 (Bloomberg) -- Yields on U.S. Treasury bills fell the most in two decades on demand for the safest securities amid concern over a widening credit crunch.
Bill yields have fallen five straight days as money market funds dumped asset-backed commercial paper in favor of the shortest-maturity government debt. Three-month yields dropped the most since the stock market crash of 1987 and more than in the wake of the Sept. 11, 2001, terror attacks in the U.S, as funds shunned assets that may be linked to a weakening mortgage market.
``The market is totally, absolutely, completely in fear mode,'' said John Jansen, who sells Treasuries at CastleOak Securities LP in New York. ``People are afraid that lots and lots of mortgage paper and mortgage paper derivatives of all sorts is completely opaque and they can't price it.''
The three-month Treasury bill yield fell 0.66 percentage point to 3.09 percent as of 5:06 p.m. in New York. It's the most since Oct. 20, 1987, when the yield fell 85 basis points on the day the stock market crashed, and eclipses the drop of 39 basis points on Sept. 13, 2001, the day the Treasury market reopened after the attacks. The yield has fallen from 4.69 percent on Aug. 13. The bills yielded about 7 percent in mid-October 1987 and 3.2 percent in the days before the September 2001 attacks.
``I've never seen it like this before,'' said Jim Galluzzo, who began trading short-maturity Treasuries 20 years ago and now trades bills at RBS Greenwich Capital in Greenwich, Connecticut. ``Bills right now are trading like dot-coms.''
`Get Into Treasuries'
The flight to government debt helped the U.S. Treasury sell $21 billion in three-month bills today at a high discount rate of 2.85 percent, the lowest since 2.8 percent on May 16, 2005.
Investors fled even money market funds, considered among the safest instruments, on concern that the funds, which hold $2.5 trillion, have invested in risky collateralized debt obligations backed by subprime mortgage loans.
``We had clients asking to be pulled out of money market funds and wanting to get into Treasuries,' ' said Henley Smith, fixed-income manager in New York at Castleton Partners, which oversees about $150 million in bonds. ``People are buying T-bills because you know exactly what's in it.''
Institutional investors added $39.7 billion from Aug. 14 to Aug. 17 to money market funds holding primarily government securities, a 12 percent increase, according to Connie Bugbee, managing editor of the Money Fund Report newsletter in Westborough, Massachusetts. Assets in funds that may also hold commercial paper, certificates of deposit and floating-rate notes fell 2 percent, or $24.5 billion, in the same period.
TED Spread
Three-month Treasury bill yields have fallen to 2.40 percentage points less than the London interbank offered rate, from 1.74 percentage points on Aug. 17. The ``TED'' spread, as it is known, is larger than after the 1987 crash. TED originally stood for Treasury-Eurodollar .
The Federal Reserve Bank of New York said in a statement it won't re-invest the $5 billion of Treasury bill holdings maturing on Aug. 23 through its System Open Market Account to give it ``greater flexibility' ' to manage reserves. It is the first time the Fed redeemed the bills since the 2001 terrorist attacks.
The move shows the Fed expects banks to borrow that much at the Fed's discount window, compared with an average $187 million borrowed daily in the past year, said Tony Crescenzi, chief bond market strategist for New York-based Miller Tabak & Co.
The yield on the benchmark two-year note fell 10 basis points to 4.08 percent. The price of the 4 5/8 percent security due in July 2009 rose about 1/8, or $1.25 per $1,000 face amount, to 100 31/32.
Slower Economy
More than half of the 21 primary government security dealers that trade with the Fed now expect the central bank to cut its target interest rate by next month from the current level of 5.25 percent.
``The Fed is going to lower the funds rate, it's a question of when,'' said Thomas Tierney, head of U.S. Treasury trading at Citigroup Global Markets Inc. in New York. ``Credit's gotten tighter, and it's going to slow the economy.''
Interest-rate futures traders see a 100 percent chance the fed will lower its overnight lending rate between banks by its next meeting on Sept. 18. Seventy percent of those bets are for rates to drop to 4.75 percent, while the balance is for a cut to 5 percent.
The Fed on Aug. 17 cut the rate it charges banks for direct loans to banks by 0.5 percentage point to 5.75 percent. It was the first reduction in borrowing costs between scheduled meetings since 2001. The central bank said in a statement that risks to the economy have risen ``appreciably. ''
To contact the reporters on this story: Deborah Finestone in New York at dfinestone@bloomber g.net ; Elizabeth Stanton in New York at estanton@bloomberg. net Last Updated: August 20, 2007 17:09 EDT __._,_.___
Please keep in mind that I (alaska joe) am not licensed or authorized to provide investment advice. Any statements made herein merely reflect my personal opinions. Please make your own investment decisions based upon your personal circumstances.
Treasury Bill Yields Fall Most Since 1987 on Money Fund Demand
By Deborah Finestone and Elizabeth Stanton
Aug. 20 (Bloomberg) -- Yields on U.S. Treasury bills fell the most in two decades on demand for the safest securities amid concern over a widening credit crunch.
Bill yields have fallen five straight days as money market funds dumped asset-backed commercial paper in favor of the shortest-maturity government debt. Three-month yields dropped the most since the stock market crash of 1987 and more than in the wake of the Sept. 11, 2001, terror attacks in the U.S, as funds shunned assets that may be linked to a weakening mortgage market.
``The market is totally, absolutely, completely in fear mode,'' said John Jansen, who sells Treasuries at CastleOak Securities LP in New York. ``People are afraid that lots and lots of mortgage paper and mortgage paper derivatives of all sorts is completely opaque and they can't price it.''
The three-month Treasury bill yield fell 0.66 percentage point to 3.09 percent as of 5:06 p.m. in New York. It's the most since Oct. 20, 1987, when the yield fell 85 basis points on the day the stock market crashed, and eclipses the drop of 39 basis points on Sept. 13, 2001, the day the Treasury market reopened after the attacks. The yield has fallen from 4.69 percent on Aug. 13. The bills yielded about 7 percent in mid-October 1987 and 3.2 percent in the days before the September 2001 attacks.
``I've never seen it like this before,'' said Jim Galluzzo, who began trading short-maturity Treasuries 20 years ago and now trades bills at RBS Greenwich Capital in Greenwich, Connecticut. ``Bills right now are trading like dot-coms.''
`Get Into Treasuries'
The flight to government debt helped the U.S. Treasury sell $21 billion in three-month bills today at a high discount rate of 2.85 percent, the lowest since 2.8 percent on May 16, 2005.
Investors fled even money market funds, considered among the safest instruments, on concern that the funds, which hold $2.5 trillion, have invested in risky collateralized debt obligations backed by subprime mortgage loans.
``We had clients asking to be pulled out of money market funds and wanting to get into Treasuries,' ' said Henley Smith, fixed-income manager in New York at Castleton Partners, which oversees about $150 million in bonds. ``People are buying T-bills because you know exactly what's in it.''
Institutional investors added $39.7 billion from Aug. 14 to Aug. 17 to money market funds holding primarily government securities, a 12 percent increase, according to Connie Bugbee, managing editor of the Money Fund Report newsletter in Westborough, Massachusetts. Assets in funds that may also hold commercial paper, certificates of deposit and floating-rate notes fell 2 percent, or $24.5 billion, in the same period.
TED Spread
Three-month Treasury bill yields have fallen to 2.40 percentage points less than the London interbank offered rate, from 1.74 percentage points on Aug. 17. The ``TED'' spread, as it is known, is larger than after the 1987 crash. TED originally stood for Treasury-Eurodollar .
The Federal Reserve Bank of New York said in a statement it won't re-invest the $5 billion of Treasury bill holdings maturing on Aug. 23 through its System Open Market Account to give it ``greater flexibility' ' to manage reserves. It is the first time the Fed redeemed the bills since the 2001 terrorist attacks.
The move shows the Fed expects banks to borrow that much at the Fed's discount window, compared with an average $187 million borrowed daily in the past year, said Tony Crescenzi, chief bond market strategist for New York-based Miller Tabak & Co.
The yield on the benchmark two-year note fell 10 basis points to 4.08 percent. The price of the 4 5/8 percent security due in July 2009 rose about 1/8, or $1.25 per $1,000 face amount, to 100 31/32.
Slower Economy
More than half of the 21 primary government security dealers that trade with the Fed now expect the central bank to cut its target interest rate by next month from the current level of 5.25 percent.
``The Fed is going to lower the funds rate, it's a question of when,'' said Thomas Tierney, head of U.S. Treasury trading at Citigroup Global Markets Inc. in New York. ``Credit's gotten tighter, and it's going to slow the economy.''
Interest-rate futures traders see a 100 percent chance the fed will lower its overnight lending rate between banks by its next meeting on Sept. 18. Seventy percent of those bets are for rates to drop to 4.75 percent, while the balance is for a cut to 5 percent.
The Fed on Aug. 17 cut the rate it charges banks for direct loans to banks by 0.5 percentage point to 5.75 percent. It was the first reduction in borrowing costs between scheduled meetings since 2001. The central bank said in a statement that risks to the economy have risen ``appreciably. ''
To contact the reporters on this story: Deborah Finestone in New York at dfinestone@bloomber g.net ; Elizabeth Stanton in New York at estanton@bloomberg. net Last Updated: August 20, 2007 17:09 EDT __._,_.___
Please keep in mind that I (alaska joe) am not licensed or authorized to provide investment advice. Any statements made herein merely reflect my personal opinions. Please make your own investment decisions based upon your personal circumstances.
TSP Prospectors Introduction
My fellow prospectors in the TSP, I have created this blog to post messages and information relevant to our mutual interest in the TSP and markets. This will allow all of you to access current and past postings without having to save them in your email system or be concerned if your email address changes. I am going to give this a trial attempt and check with you to see if it has merit from your point of view. more later.
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