Dollars and Jens
Wednesday, August 15, 2007
a couple quick notes
Ima go to bed soon, but thought I'd observe a couple factiods: first, the spread between the two-year spread and the two-year treasury yield has hit 65 bp, and seems to just keep climbing. Second, while the Fed hasn't lowered its stated target, the actual overnight rate was 4.68% last weekend, 4.81% Monday night, and 4.54% last night. I don't know how much of this is a lack of fine control and erring on the side of liquidity and how much is a covert sense that they want to lower the interest rate on overnight borrowing for a while, but don't want to subject the market to an announcement that they're raising the target back to 5.25% when they think that's the thing to do.

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