With credit markets still essentially frozen, investors are looking for places to park cash with the hope of one day being able to retrieve it. US T-bills are about the only game in town at the moment, driving rates to ridiculously low levels. The Treasury just auctioned 101-day bills at a 1.5% median yield with almost $3.5 of bids for every dollar of bills auctioned.
St. Louis Fed President Bullard is on the tape echoing comments from Dallas’s Fisher last night that rate cuts are not particularly effective at this juncture. I agree and have been writing for months that it is not the price of credit that is the problem but the availability of credit that is at issue. Lower fed funds rates help bank profits at the margin but they have not been passed along to the markets where they are needed most.
Finally, French finance minister Lagarde says the lower Euro is helping the European economy.
EUR/USD continues its choppy range trade, jockeying either side of 1.4600. It presently trades at 1.4585.
