August 2006 Weddings
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Money-Market Rates Rise on Concern $700 Billion U.S. Bailout to Be Delayed
Money-Market Rates Rise on Concern $700 Billion U.S. Bailout to Be Delayed
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Money-Market Rates Increase on Bailout-Delay Concern (Update2)
2008-09-25 10:55:25.40 GMT
(Adds dollar rate in second paragraph.)
By Gavin Finch and David Yong
Sept. 25 (Bloomberg) -- Money-market rates rose on concern
the U.S. Treasury's $700 billion bailout plan will be delayed or
diluted, causing financial institutions to hoard cash.
The euro interbank offered rate, or Euribor, that banks
charge each other for one-month loans rose today to the highest
level since December 2000. The three-month London interbank
offered rate, or Libor, for dollars rose the most since 1999.
Corresponding rates in Hong Kong and Singapore also climbed as
Bank of East Asia Ltd. faced a run on deposits. The difference
between the three-month dollar rate and the overnight indexed
swap rate, the Libor-OIS spread, widened to the most on record.
``The conditions are revealing a new level of breakdown in
the global financial system that central banks appear powerless
to fix,'' Greg Gibbs, director of foreign-exchange strategy at
ABN Amro Bank NV in Sydney, wrote in a research note today.
``There's an element of end-quarter demand for liquidity
intensifying the problem.''
Money-market rates signal banks have all but stopped
lending to each other. Treasury Secretary Henry Paulson's
bailout plan, which proposes moving tainted assets from bank
balance sheets to a new institution, has met resistance from
Congress. The U.S. faces a ``painful'' recession if the measure
isn't approved, President George W. Bush said yesterday.
The Libor-OIS spread widened 31 basis points to 198 basis
points today, the most on record. It averaged 8 basis points in
the 12 months to July 31, 2007, before the credit squeeze began.
Bank Run
``Systemic risks are extremely high, and the outlook
appears bleak,'' said Laurence Mutkin, the London-based head of
European fixed-income strategy at Morgan Stanley. ``Term lending
markets appear almost to have closed, while cash hoarding
continues.''
The cost of one-month loans in euros climbed 7 basis points
to 4.98 percent, the European Banking Federation said today. It
was at 4.52 percent a week ago. Three-month Libor for dollars
rose 29 basis points to 3.77 percent, the British Bankers'
Association said. That's the most compared to the Federal
Reserve's target rate on record. Hong Kong's three-month rate
rate rose 13 basis points to 3.80 percent, the highest level
since December 2007.
Hong Kong had its first bank run since the Asian financial
crisis in 1997 as depositors rushed to withdraw funds from Bank
of East Asia. The bank's chairman, David Li, said the lender has
``no problem'' and Joseph Yam, chief executive of Hong Kong's
central bank, urged customers to ``stay calm.'' The Hong Kong
Monetary Authority injected HK$3.88 billion ($500 million) into
the banking system today.
Singapore Rates
Chinese lenders, including Industrial and Commercial Bank
of China, have set tighter standards on credit lines with
international finance companies, according to people at the
banks' treasury departments who declined to be named. Others
like China Citic Bank Corp. imposed tighter limits on interest-
rate swaps to avoid losses.
Singapore's three-month dollar loan rate surged 29 basis
points to 3.684 percent today, the highest level since Jan. 22,
according to the Association of Banks in Singapore. In
Australia, the one-month bank bill swap rate, used to determine
yields on variable-rate loans, was 7.458 percent, the highest
level since Aug. 5, according to data compiled by Bloomberg.
``The Australian financial system has felt the impact'' of
global difficulties, the Reserve Bank of Australia said in its
half-yearly Financial Stability Review published today in
Sydney. ``The general increase in uncertainty has also meant
that most banks are taking a more cautious attitude to
lending.''
The nation's banks were holding A$7 billion ($5.9 billion)
of on-call deposits with the central bank, the most since at
least 2003, according to the Reserve Bank of Australia.
Losses and Writedowns
Financial institutions around the world have posted $523
billion in losses and writedowns tied to the collapse of the
U.S. subprime-mortgage market since the start of last year.
The difference between what banks and the Treasury pay to
borrow money for three months, the so-called TED spread,
narrowed to 288 basis points today. It was 114 basis points a
month ago. The spread increased to 313 basis points on Sept. 18,
the most since Bloomberg began compiling the data in 1984.
--With reporting by Ron Harui in Singapore and Belinda Cao in
Beijing. Editors: Justin Carrigan, Daniel Tilles
To contact the reporters on this story:
Gavin Finch in London at +44-20-7073-3627 or
gfinch@bloomberg.net;
David Yong in Singapore at +65-6212-1169 or
dyong@bloomberg.net
To contact the editor responsible for this story:
Justin Carrigan at +44 20 7673-2502 or
jcarrigan@bloomberg.net
Re: Money-Market Rates Rise on Concern $700 Billion U.S. Bailout to Be Delayed