feds

WHY DID INTEREST RATES GO UP WEDNESDAY WHEN THE 10 YEAR YIELD WENT DOWN??

Short Answer:  Banking liquidity

The Federal Reserve on Friday announced two new steps to add cash to the banking system.

Despite aggressive actions taken in recent months, a fresh wave of apprehension about the health of the U.S. and global financial markets has swept through credit markets this week.

Banks have already reported tens of billion in losses, mostly via complex securities tied to subprime mortgage loans, and there's concern that more losses are coming. In addition, there are fresh worries about the health of the U.S. economy.

In a statement, the Fed said simply that the measures were needed to address "heightened liquidity pressures in term funding markets."

The liquidity injections are designed to give banks more capital and confidence to lend money to their customers and to each other. Lending is the grease that turns the wheels of the economy.

Fed policymakers are worried that a credit crunch would only make the economic downturn worse. They said the action was taken because the deterioration in credit markets has accelerated some in the last several days.