As noted by Calculated Risk and William Polley, the last few days we’ve seen the return of slightly more normal behavior in the overnight market for fed funds.
Author Archives: James_Hamilton
Solutions to the mortgage problem
Quick links to a few of the suggestions out there on what to do about pending mortgage defaults.
San Diego plans for the future
With all the excitement over the last few weeks, I never had a chance to mention this remarkable account of the long-run vision of San Diego’s City Council.
Latest economic indicators
New home sales picked up in July, and new orders for durable and capital goods grew strongly. But that was then and this is now.
Whee!
Who knew holding short-term Treasuries could be so exciting?
What does the cut in the Fed’s discount rate signal?
Some analysts, and perhaps the market, seemed to view Friday’s cut in the Federal Reserve discount rate as a first step in lowering interest rates generally. That view may prove to be correct, though I’m inclined to look first for an explanation in terms of the narrow tactical challenges of managing current liquidity needs.
Where’s the risk?
Usually an economic downturn is associated in a big increase in the spread between corporate and Treasury yields. This spiked pretty dramatically last week, but still has a long way to go.
Another roller coaster week
Glad I wasn’t trying to provide a play-by-play explanation of fed funds futures last week. But whatever was going on, we seemed to end up with the same conclusion with which the week began.
What is a liquidity event?
It was an exciting week in financial markets, including some dramatic central bank interventions in short-term money markets.
Interpreting fed funds futures
Despite what you may have read elsewhere, the probability of a fed funds rate cut has increased significantly over the last few weeks.