POUND
Sterling is trading down by a quarter of one percent this morning against the Euro but has managed to stay flat vs. the USD. This comes after a worse than expected unemployment rate, increasing to 8.4% from 8.3% expected, although the increase in the number of people claiming unemployment benefits was only 1.2k against 9.1k expected. This data although mixed will do little to encourage investors to buy the pound with the UK economy clearly struggling and with lower inflation data out yesterday, sterling’s performance rests heavily on whether the BoE will start QE again next month. T
23
Jan
2012
Posted by Alexis Del Fabbro
15
Nov
2011
Posted by Christian Bowles
Late yesterday the Federal Reserve announced an increase in the discount rate, not the more important federal funds rate. Let me type that again: The Fed did not increase the all-important federal funds rate. So what is the discount rate and what, if anything, is the significance of this?
The discount rate is what banks pay to borrow directly from the Federal Reserve. The term “discount” is a misnomer as there’s no discount. In fact, it is by design a somewhat punitive rate designed to encourage banks to tap other sources of funds rather than relying on the Fed.
7
Jan
2010
Posted by Admin
The year ended with Treasury bond rates rising rather significantly. Unfortunately, the rise in Treasury rates did not lead to a rise in bank certificate of deposit rates.
Ten year Treasury rates started 2009 at extraordinarily low yields, as investors and banks poured money into the Treasury market as a safe harbor. The closing high for the ten year Treasury in January of 2009 was 2.87% ( the close of January is better barometer of average rates since January rates were unusually low due to market uncertainty ) and it closed out 2009 with a yield of 3.85%. The low point was reached in January when the yield hit 2.23% and the high rate was 3.98% in June.
The five year Treasury showed a similar increase, reaching a high of 1.87% in January and closing 2009 with an interest rate of 2.69%. The lowest rate reached was in January when the yield dropped to 1.36% and the highest rate was 2.93% in June.
The current Treasury rates are therefore not at their highs but within 25 basis points or 25/100 of a percent of the yearly peak rate for both terms.
The one year Treasury was actually quite stable compared to the longer term Treasury maturities throughout the year. The highest rate on the one year Treasury in January was 0.51%. At the end of 2009, the one year Treasury had a rate of 0.47%. The highest rate reached was 0.75% with the low at 0.26%.
With the low dollar and banks still reluctant to lend significant sums of new money, the conclusion on the direction of interest rates is clear…….as soon as someone can definitively tell us what that direction is, we will print it. The consensus among the Wall St. pundits has
6
Jan
2010
Posted by Admin
Current LIBOR rates
Weekly close:
3 Month LIBOR Rate 0.25%
6 Month LIBOR Rate 0.43%
1 Year LIBOR Rate 0.97%
LIBOR rate is an acronym for the London InterBank Offered Rate. The LIBOR rate is defined as the wholesale lending rate between international banks in the London wholesale money market. It is the average interest rate banks are charging one another for unsecured loans in the interbank market at varying terms or maturities.
The LIBOR rate index is calculated by taking an average of market rate quotes from each member bank that participates in the survey.
This LIBOR rate is similar to the US fed funds rate though the LIBOR rate is not directly influenced by the European monetary authorities as the fed funds rate is and LIBOR rates can extend for periods of time that are much longer then US overnight fed funds rate.
The LIBOR rate is published and used as a benchmark for bank lending rates in the U.S and all throughout world financial markets. Numerous loan interest rates, such adjustable home mortgage rates, student loan rates, and business loan interest rates are based on the LIBOR rate.
LIBOR rates will fluctuate based on a number of market factors including interest rates on similar term securities, expectations of future interest rate movements, the financial soundness of banks engaged in LIBOR loans and overall liquidity in the London money market.