Fed lost control of Effective Fed Funds
- Thread starter Daal
- Start date
1) Translate that into "English".
2) The November and December contracts got too far ahead of themselves? There can be an expectation that the rate will remain below the target for the rest of this year but the 2009 contracts will stay closer to the actual target rate.....for now.
3) Will the Fed "stick to its guns" or be a slave to the market? We'll see.
2) The November and December contracts got too far ahead of themselves? There can be an expectation that the rate will remain below the target for the rest of this year but the 2009 contracts will stay closer to the actual target rate.....for now.
3) Will the Fed "stick to its guns" or be a slave to the market? We'll see.
0.23% yesterday even after the bank interest hike!
this could be due the FDIC interbank guarantee program. a bank can pay .75bps to the fdic and get a loan backed by the government and be able to borrow at close to the ultra short-term t-bill rate(its an overnight loan after all)
Its possible that the entire fed funds future curve is underpriced here and fortunes can be made if this liquidity trap is not solved so I will stick with longs here
this could be due the FDIC interbank guarantee program. a bank can pay .75bps to the fdic and get a loan backed by the government and be able to borrow at close to the ultra short-term t-bill rate(its an overnight loan after all)
Its possible that the entire fed funds future curve is underpriced here and fortunes can be made if this liquidity trap is not solved so I will stick with longs here
http://www.econbrowser.com/archives/2008/11/the_new_improve.html
What is the trade here? Is this a scheme to capitalize the FDIC? If they lower the FDIC insurance rate below .75, then fed funds are a sell.
What is the trade here? Is this a scheme to capitalize the FDIC? If they lower the FDIC insurance rate below .75, then fed funds are a sell.