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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Think4Yourself who wrote (84916)	8/13/2007 8:30:07 AM
From: Paul Kern	Read Replies (1) \| Respond to of 110194

Fed Funds Open at 5 1/4 Percent, Matching Central Bank's Target By Ye Xie Aug. 13 (Bloomberg) -- Federal funds began trading at 5.25 percent, matching the Federal Reserve's target, after rising above the target the past two days. The European Central Bank earlier added emergency funds to the banking system for a third trading day, loaning 47.7 billion euros ($65 billion) to banks. The ECB said money markets are returning to normal. Stocks advanced in Asia and Europe and futures in the U.S. pointed to gains at the start of trading. The ECB, the Fed and other central banks injected $154 billion into money markets on Aug. 9 and $135.7 billion on Aug. 10 amid concern that subprime mortgage losses will curtail lending. Central banks in Japan and Australia, which joined the ECB and the Fed in pumping cash into their markets last week, today refrained from providing emergency funds. The Fed today may add less than the $38 billion it did on Aug. 10, which was the most since September 2001, according to Wrightson ICAP, a research unit of ICAP Plc specializing in U.S. government financing. Under normal market conditions, the Fed needs to inject $7 billion today via repo operations to keep the Fed funds close to its target, according to Wrightson. After the Fed pumped in extra cash, the Fed funds rate closed at zero percent on Aug. 10, pushing the weighted average down to 4.79 percent, according to ICAP Plc, the world's largest inter-dealer broker. The Fed funds traded as high as 6 percent. In repos, the Fed buys U.S. Treasury, mortgage-backed and so-called agency debt from its 21 primary dealers for a set period, temporarily raising the amount of money available in the banking system. At maturity, the securities are returned to the dealers, and the cash to the Fed. Repos help maintain enough money in the system to keep overnight interest rates close to the central bank's target. They don't signal a policy shift. To contact the reporter on this story: Ye Xie in New York at yxie6@bloomberg.net . Last Updated: August 13, 2007 07:51 EDT