Now they cancel it! The following operation has been cancelled: Deal Date: Wednesday, August 15, 2007 Delivery Date: Wednesday, August 15, 2007 Maturity Date: Thursday, August 16, 2007 Type of Operation1: Repo Settlement: Same Day Term of Operation2: 1 Day Operation Close Time: 09:40 AM
Another $7.0bln. The FED are going to be working ovetime over the next few weeks. http://www.newyorkfed.org/markets/omo/dmm/temp.cfm Temporary Open Market Operations To implement monetary policy, short-term repurchase and reverse repurchase agreements are used to temporarily affect the size of the Federal Reserve System's portfolio and influence day-to-day trading in the federal funds market. Temporary Open Market Operations for August 15, 2007 Last Updated: August 15, 2007 10:57 AM Number of Operations Today: 2 Deal Date: Wednesday, August 15, 2007 Delivery Date: Wednesday, August 15, 2007 Maturity Date: Thursday, August 16, 2007 Type of Operation1: Repo Settlement: Same Day Term of Operation2: 1 Day Operation Close Time: 10:30 AM Results Amount ($B) Rate (%) Collateral Type Submitted Accepted Stop-Out3 Weighted Average4 High Low Treasury 10.550 0.000 N/A N/A 4.25 3.50 Agency 17.850 2.500 4.65 4.650 4.65 3.60 Mortgage-Backed 19.175 4.500 4.65 4.681 4.70 4.35 Total 47.575 7.000
except this one got out of hand, unlike the one last year. we live in interesting times and it remains to be seen if they can rescue it this time. BP III
The first reaction to the big European Central Bank injection of liquidity early last week, was that "they must see something that we don't." That reaction has been echoed again and again as central banks have made huge injections of liquidity. One columnist speculated yesterday, after the Fed cut the discount rate, that there must be a huge market player on the brink. The monster is, rather, THE NEARLY IDENTICAL MATHEMATICAL MODEL used by a large number of "quant" (quantitative model) hedge funds. One assumption built into that widely shared model has been the stablility, and high liquidity, of mortage-backed paper. The fact so many funds have employed this assumption, and that this assumption has been proven to be deeply flawed, raises the specter of domino-like liquidation of fund after fund, with sell-off after sell-off in the stock markets. The reason the Fed is relatively powerless, and therefore afraid and anxious to act early, is that NO AMOUNT OF LIQUIDITY will make market players willing to touch many billions of dollars in mortgage paper, when there is absolutely no way to value that paper! (The reason there is no way to value it, is because there is no way to predict the mortgage default rate, except that it will continue to escalate very sharply over the next 18 months.) The Fed can cause as many one-day rallies as it likes. But every time it cuts some interest rate, it will increase the pressure on the dollar, foreign investors will sell treasuries, and MORE PRESSURE on the secondary mortgage market will result. Incredible, unprecedented lending practices have created a monster. The herd of straight-line mortgage lenders and builders who jumped nose-deep into the game, is about to be thinned significantly. There is very, very little the Fed can do about it.
we got money, np. <!-- include cost of war javascript; this runs the counter --> <script language="JavaScript" src="http://costofwar.com/costofwar.js"></script> <!-- the elements 'row' and 'alt' will be changed by the javascript to contain the correct numbers --> <div><b>Cost of the War in Iraq</b></div> <div id="raw">(JavaScript Error)</div> <div><a href="http://costofwar.com" target="_top">To see more details, click here.</a></div> <!-- this line triggers the counter to start --> <script language="JavaScript"> inc_totals_at_rate(1000); </script>
anyone here take a different view that the big banks actually are freezing fund availability to the mortgage player (ie the AHMs of the world) in order to kill prices on mortgage paper intentionally? The purpose here is to buy this debt (which they will get stuck with) at a large discount, greater than the real risk in the paper. So god forbid mortgage defaults do occur, they've bought the debt on the cheap and likely have payed a mucher greater discount than the real default risks in the paper. Furthermore, these hedge funds don't just bail and deleverage -- they often -switch- from long to short (or vice versa), in order to profit the most. What makes you think that isn't the case with whats happened in equities, indexes, and currencies? And lastly ... The retail and long term investment (ie via mutual funds) player is not generally liquidating his portfolio in these markets today. This guy is just watching this and not participating. Because of this, risk premia are not going to weigh valuations as a reaction to volatility we've seen. In other words, hedge fund reloadings are just as likely to follow these liquidations if the fundamentals (valuations, economic story [ie currencies], etc) remain similar in these violent trading moves (and they do). This isn't the great dumping of overvalued stocks that took place in 2000 to be followed by a flight to the tangible (housing). Don't kid yourself that it is. All of your postulating doesn't take that into concern.
No worries, we are heading for a soft landing. http://news.yahoo.com/s/afp/2007081...omyproperty;_ylt=Ar6cLHEaFoKplwncwYkcqC1vaA8F