Reading this article: the first page: the sharp decrease in the discount rate by 25 basis points the Fed "desperate times" throwing "desperate measures" on the second page: "all of the market is entering a vicious circle," the third page: United States crisis tests China decision page four: Fed's rescue also need to improve the transparency of the fifth page: rescue operations in the besieged little USD
The sharp decrease in the discount rate by 25 basis points the Fed "desperate times" throwing "desperate measures"
In almost 30 years since the first weekend of emergency meeting, the Fed has lowered the discount rate offering. But this does not mitigate the fears of investors, rather than stimulate market on the subprime mortgage crisis to further deepen the panic. Meanwhile, 18, United States Federal open market Committee (FOMC) meeting, held in yixi had analysis institutions guessing the intensity may increase the interest rate, interest rate cut of 75 points or even 100 points. "The United States to implement such emergency measures more confirmed the United States current financial deterioration than previously estimated. "Morgan Stanley greater China Chief Economist Wang said in an interview. "Despair desperate measures required at all times. The Fed is taking measures to regain its stability, but if this means that in the United States of Saturday night's interest rate, that's okay. "Sydney Commesec Chief securities Economist Craig · James said.
The "garbage" endorsement difficult to harness people's hearts
According to http://finance., local time, 16 March, the Federal Reserve in the Asian markets opened suddenly announced the discount rate from 3.5% to 3.25%, to increase market liquidity. The news published a dozen hours ago, JP Morgan and fed announce joint emergency financing for Bear Stearns, to save the bankers. Also, the Fed also ratified yesterday Morgan to approximately US $ 2 per share price of the acquisition of Bear Stearns. In accordance with Bear Stearns announced in January of this year's annual report the number of shares, this transaction on bear's valuation only 2.36 billion. If you learn to bear Stearns in Manhattan on Madison Avenue's global headquarters building is more than 10 billion dollars, bear's "sale" more reveals United States cruel liquidity crisis. A United States Fund Manager said the Bear Stearns crisis has begun in earlier. "As early as last Thursday we will get the message out of Bear Stearns, quickly take measures. Very fortunately, I had just put on Thursday all the money from Bear Stearns, on Friday and it broke. "Bear's customers are international large investment banks and hedge funds, it was supposed to be the industry more secure institutional broker (prime brokerage), it can provide hedge fund provides a comprehensive account of the various investment tools in one account, so attractive that it absorbed by client funds may be as high as $ on Siu. But the problem is that not long ago the rumors bear market will appear financial difficulties or even bankruptcy, many customers start massive withdrawals, many people fear that once the clearance, may own funds to be frozen for a long time. This results in the company there financial difficulties, at the same time, the company's stock price plummeted as well. "Less than half a year ago, the bear's stock price or even up to more than $ 150, or even a week ago was more than $ 70. Morgan large generic 2 US $/unit nominal prices to buy Bear Stearns, which reflects what? how can not panic on the market? "asked the Fund Manager. But the Fed lowered the discount rate by 25 basis points to 3.25%, only more interbank borrowing the reference benchmark federal funds rate target by 25 basis points, why the market would remain indifferent? our hedge fund managers Sonny on reporter said that the problem lies not in the interest rate cut, nor is the fed and Morgan's rescue measures unpopular, but the Fed not long ago to allow financial institutions to "junk" bonds as collateral assets to Central Bank financing, has triggered a serious investors. He said that the market is not agree with the Federal Reserve, which is the equivalent of the junk bond placed and the United States Government bond equal status. "The Federal Reserve yourself a degraded, then who would buy a United States national debt?" Sonny, "the Fed's practices revealed a worrying situation, the United States financial institutions in the United States national debt to the Bank's mortgage financing, this stage may have no collateral assets to the Bank for financing, this is perhaps the more recent market volatility of the underlying cause. ”
Market expectations: rate cut of 75 ~ 100 basis points
For the Fed this action, the market does not appreciate it, they look close watched today convened by the Federal Reserve open market Committee meeting, whether or not to take interest rate cut means will be decided at this meeting. United States Ministry on March 14, published in February, the core CPI data display than the CPI ring zero growth, shows the United States in the economic downturn, inflationary pressures. CICC economists Shen Jian Guang in yesterday's release of the report of analysis that, in the economic risk of facing down, the Federal Reserve to pay more attention to core inflation rather than overall inflation, as long as core inflation is relatively stable, MEDLINE Chuwei guarantee economic growth will continue to cut interest rates. But before that, the Fed has announced a new round of a regular securities lending arrangements (TSLF) rescue plan, to level dealers provide up to $ 200 billion of Treasury bonds. Shen Jian optical analysis said that the plan is essentially to State bonds, the Fed is best of collateral and Bank Exchange poor collateral to facilitate inter-bank market liquidity, however this scheme to 27 March started, has now been caught in a liquidity crisis, liquidity significantly shrunk by financial institutions seem a bit late in coming. But in the long term, the underlying causes of the credit crunch or price decreases, it is difficult to improve business and buyer financing difficult situation. Given the current economic entities in weak States, interest rates remains the Fed currently can ease the United States economic growth stagnated problems inevitable choice. "From the market price performance, 100%
The Federal Reserve will cut interest rates of probability is equal to or more than 75 basis points, there are approximately 50% chance the Fed could cut interest rates of 100 basis points, the effectiveness of the policy remains to be seen. "Wang to reporters. The Fed's aforementioned conduct indicates that the Fed will do everything possible to save credit market, but if the effect is still affected by the market, investors instead of on the credit crisis deepens even more concern. CMC Markets in New York, Chief Forex strategist ashina Cardiff · Leite is directly show the pessimism. He thinks the dollar had a near-crisis point, but with decreased and the acceleration of the speed, the currency is the edge of the slide to runaway, if the Fed lowered interest rates, the Fed rate cut this week will have a very high against the dollar. Leticia's view, a leading international bank soon may intensify oral intervention intensity, expressed in the foreign exchange market volatility concerns, but also possible covert intervention which commercial banks in accordance with the other central banks of MEDLINE Chuhuo commands massive dollars. Central Bank intervention possibilities between combined, as in the smaller fundamental disadvantage, the dollar may be reasonable.
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