Greetings Minneapolis!!
Another day and well---another sunrise?
The credit markets seem to be stabalizing, which is a great thing!! The bond market has been extremely volatile the past week. We have seen rates ranging from 5.5% to 6.75% to 5.625% again. The reason for the bouncing has been varied.
While the Minneapolis Interest Rates were at 5.5%, the first time around, it was because the 10 yr. Treasury Bond was at incredibly low levels with a high bank spread on the back side. As the credit crisis tighten to the its peak, the 10 yr. Treasury rose along with the high bank spread for an interest rate high at 6.75%. This recent Minneapolis Interest Rate downturn is being led by a combination of lower of the yield of the 10 yr. Treasury Bond and an lowering of a bank spread rate.
In summary, where the Minneapolis Mortgage Rates stand currently is a GREAT sign of Bank confidence in the efforts of the Federal Governments on a Global Frontier. Efforts from around the world to help back the Financial Institutions may finally be clicking!!
As the global 'deleveraging' continues, we are moving into a different reality of credit. I look forward to a more responsible movement by the US and its society towards spending, credit and peace. Now if we can just get our Governement to start balancing its checkbook----we will be heading in the right direction!!!
Below is an Article from CNN:
Credit market less jittery
Key lending rates continue to decline as banks warm to government efforts.
http://money.cnn.com/2008/10/21/markets/bondcenter/credit_market/index.htm?postversion=2008102107
Have a great day, enjoy your coffee and Go Timberwolves!!!
Ben Coulter
612-216-1388
Credit market less jittery
Key lending rates continue to decline as banks warm to government efforts.
By Ben Rooney, CNNMoney.com staff writer Last Updated: October 21, 2008: 7:58 AM ET
NEW YORK (CNNMoney.com) -- Bank lending rates continued to ease Tuesday amid talk of a second economic stimulus package in the United States and news of a $14 billion plan to inject liquidity into French banks.
Global economic uncertainty has made banks wary of lending and constrained the flow of capital in the financial system. But a reading of the credit market's vital signs shows slow but steady improvement.
The closely watched overnight Libor rate fell to 1.28% from 1.51% Monday, according to Bloomberg.com. It was the first time the key inter-bank lending rate fell below the Federal Reserve's benchmark interest rate, which stands at 1.5%, suggesting that credit markets are stabilizing.
Libor is a daily average of what 16 different banks charge other banks to lend money in London and is used to calculate adjustable rate mortgages. The higher the rate, the tougher it could be for homeowners to pay those mortgages.
Overnight Libor soared to a high of 6.88% earlier this month after the government's $700 billion bailout bill was signed into law.
Longer-term lending also loosened, though it remains tight. The 3-month Libor fell to 3.83% from 4.06% Monday, according to Bloomberg.com. Last week, the 3-month Libor surged to 4.82% - the highest since mid-December 2007. A month ago, the rate was under 3%.
Meanwhile, a key measure of investors' appetite for risk indicated that confidence is slowly returning in the market.
The "TED spread" declined 36 basis points to 2.61 percentage points from 2.97 points Monday. This spread measures the difference between the 3-month Libor and the 3-month Treasury bill.
A wider spread means the market has less appetite for risky business. The spread reached a record high of 4.65 points a little more than a week ago.
Stimulus redux: Congress could vote on a second stimulus package shortly after November's election as momentum builds for additional economic aid.
A second stimulus package could soften the blow of a potentially long and severe recession. That may give banks more incentive to lend in anticipation of an eventual rebound in the economy.
Federal Reserve Chairman Ben Bernanke told House lawmakers Monday that "consideration of a fiscal package by the Congress at this juncture seems appropriate" given the risk of a "protracted slowdown."
That followed comments over the weekend from the president's chief economic adviser, Ed Lazear, who said "parts of the country" are already in recession.
White Hose officials have signaled that President Bush would be "open" to a second stimulus package, though the administration has expressed doubts about many of the proposals being discussed.
Among the stimulus efforts being considered by congressional Democrats: extend jobless benefits, increase food stamps and investments in infrastructure projects to create jobs in the near term.
Democrats have also called for a moratorium on foreclosures and for making permanent a temporary increase on loan limits for mortgages that may be backed by government sponsored lenders.
Congressional Republicans, meanwhile, contend that tax breaks are more prudent than direct payments to citizens or investment in infrastructure.
Republicans have called for a temporary reduction or elimination of the capital gains tax on stocks and real estate deals. And lower income tax rates for companies that buy distressed assets.
French banks: European markets rallied Tuesday after French finance ministers announced a $14 billion capital injection into six of the country's major banks.
The move is aimed at reestablishing confidence in France's banking system and follows in the footsteps of recent moves by the governments of Great Britain and Germany.
Banks that will receive funds include major European players like BNP Paribas, getting $3.34 billion, and Societe Generale, receiving $2.27 billion, among others.
"In exchange for this measure, they [the banks] must commit to a target of increasing loans to the economy in order to guarantee a degree of financing in line with the needs of individuals, companies, local government and professionals," French Finance Minister Christine Lagarde told the Associated Press.
France's CAC 40 stock index was up 2.3% at midday. The major gauges in Germany and Britain were roughly 1% higher.
Treasurys: U.S. government debt prices were mixed Tuesday with shorter-term debt outperforming longer-term notes.
The benchmark 10-year note fell 2/32 to 101 7/32 and its yield rose to 3.85% from 3.83% on Monday. Bond prices and yields move in opposite directions.
The 30-year long bond slid 8/32 to 103 26/32 lifting its yield to 4.27% from 4.24%.
But the two-year note added roughly 1/32 to 100 18/32 yielding 1.7%.
The yield on the 3-month bill was 1.3% after rising to 1.98% on Monday.
The yield on the 3-month Treasury bill is closely watched gauge of investor confidence. Money-market funds move money in and out of the 3-month bill frequently, depending on the level of risk in the broader market. A higher yield indicates that investors are slightly more optimistic
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