US Federal Reserve: Bloomberg Central Bank Watch
Washington, May 26 (Bloomberg) -- The following is a summary of bond market and interest-rate activity tied to the U.S. central bank:
Money Market Rates -- May 26, 2000
The federal funds rate, the interest rate charged by U.S. banks on overnight loans to other banks, fell 19 basis points to 6.38 percent, 12 basis points below the Federal Reserve's target rate.
The Fed's policy panel, the Federal Open Market Committee, on May 16 raised the overnight rate by 50 basis points to 6.5 percent, the sixth increase since June 30. The Fed said the U.S. economy faces the threat of rising inflation, suggesting more increases are likely.
The implied yield on the fed funds futures contract for July fell 1 basis point to 6.74 percent, 24 basis points above the target. The yield on the September contract fell half a basis point to 6.93 percent, 43 basis points above the target. The spread between the yield on the futures contracts and the fed funds target suggests investors expect another rate increase in coming months. The FOMC's next meeting is June 28.
Government Borrowing
The U.S. Treasury plans to sell $8.5 billion of three-month bills and $7.5 billion of six-month bills on Tuesday and $10 billion of one-year bills on Wednesday.
Economic Indicators
U.S. orders for durable goods, big-ticket items built to last at least three years, plunged 6.4 percent in April, the Commerce Department said. Personal incomes rose 0.7 percent last month, outpacing consumer spending for the second straight month, the first time that has happened in two years. Spending rose 0.4 percent in April, the smallest increase in nine months.
Who's Talking
Thursday, Federal Reserve Governor Lawrence Meyer talks on banking regulation to the Federal Financial Institutions Examination Council at the Westin Hotel on Michigan Avenue in Chicago, at 12:45 p.m. Washington time.
Also Thursday, Federal Reserve Bank of Richmond President Al Broaddus speaks on his outlook for the U.S. economy in an annual address to the Washington Association of Money Managers at the Hilton Embassy Row in Washington at 6 p.m. Washington time.
The same day, Federal Reserve Governor Edward Gramlich discusses ``Challenges for Corporate Directors'' before the Global Colloquium for Women Corporate Directors, at the Westin Fairfax Hotel in Washington, at 6:45 p.m. Washington time.
And, Kansas City Federal Reserve Bank President Thomas Hoenig speaks on ``Perspectives From a Policymaker'' to the Graduate School of Banking at Southern Methodist University, at the Hughes- Trigg Ballroom in Dallas, at the 7:30 p.m. Washington time.
Latest Comments
``Inflation is an insidious tax on all of us,'' said Federal Reserve Vice Chairman Roger Ferguson, speaking today in San Francisco at a breakfast sponsored by the National Association of Urban Bankers. ``It creates an invisible erosion on the value of income.''
Ferguson said the economy is ``experiencing remarkable growth. We do not want inflation to put this performance at risk. That would be inappropriate.''
Cost of Money Federal Funds Target Rate: 6.50 percent (5/16/00) up 50 bp Discount Rate: 6.00 percent (5/16/00) up 50 bp
May/26/2000 18:12 ET |
