Federal Reserve to Cut Rates in 2007, Corporate Bond Sales Hint

BY

While economists debate whether the Federal Reserve will cut its target interest rate for overnight loans between banks from 5.25 percent, investors have already decided the central bank will reduce borrowing costs next year.

Nowhere is that clearer than in the market for floating-rate notes, whose interest payments rise and fall with central bank policy. Sales of so-called floaters are slowing for the first time since the Fed started raising interest rates in June 2004. They've fallen to $21.5 billion in September from a monthly average of $35 billion this year through August, according to data compiled by JPMorgan Chase & Co.

Demand for floating-rate notes increased when the Fed began raising rates from a 45-year low of 1 percent two years ago. Sales jumped 50 percent to $286 billion in 2004 from $190 billion the year before, according to JPMorgan, the biggest underwriter of U.S. bonds. They climbed to $299 billion in 2005 and reached a record $301 billion so far this year.

Sales slowed after the Fed left interest rates unchanged on Aug. 8. Fed funds futures traded on the Chicago Mercantile Exchange reflect about a 40 percent chance the central bank will lower its target rate to 5 percent by the end of January.

金星

BY  在 2006-9-26 21:42 發表:

While economists debate whether the Federal Reserve will cut its target interest rate for overnight loans between banks from 5.25 percent, investors have already decided the central bank will reduc ...

buy on rumor , sell on fact..

KBG

今晚美国数据有好转，美国经济下滑的担忧可以少一点了。