PrefBlog

The Fed’s balance sheet continues to grow, with the latest H.4.1 release showing an increase of about $100-billion in Commercial Paper assets, funded by deposits – mainly from banks. However, LIBOR is now well below the Fed’s yield on paper:

The London interbank offered rate, or Libor, that banks say they charge one another for loans fell 10 basis points to 2.29 percent today, the lowest level since November 2004, the British Bankers’ Association said. The overnight rate held at a record low of 0.33 percent and the TED spread, a gauge of bank cash availability, dropped under 200 basis points for the first time since the day before Lehman Brothers Holdings Inc. collapsed.

The CPFF rate is now 1.54%, but there is a 100bp surcharge on top of that..

Today’s jobs number was icky:

The jobless rate rose to 6.5 percent in October from 6.1 percent the previous month, the Labor Department reported today in Washington. Employers cut 240,000 workers after a loss of 284,000 in September, the biggest two-month slide since 2001.

Econbrowser‘s James Hamilton provides a graph (which doesn’t look so good when re-sized for PrefBlog, so read the original post!):

The next battleground for do-over whining is GMAC SmartNotes:

Chuck Woodall, 66, who lives with his wife in Columbus, Ohio, amassed $200,000 of SmartNotes starting eight years ago, and they now equal about 25 percent of his investments. At the time, the securities were rated investment-grade and they paid more interest than government bonds or certificates of deposit. They also were backed by Detroit-based GM, the biggest U.S. automaker.

Woodall, a former owner of apparel stores and a pet-supply business, holds SmartNotes due in 2018 that he says have lost about 80 percent of their value. He said his Merrill broker told him that in more than 20 years, no client had lost money on bonds.

Sadly, the Bloomberg reporter didn’t ask ‘What the hell are you doing putting 25% of your entire portfolio in a single name?’

GM is in a bad way:

General Motors Corp., seeking federal aid to avoid collapse, said it may not have enough cash to keep operating this year and will fall “significantly short” of the amount needed by the end of June unless the auto market improves or it raises more capital.
…
GM’s $3 billion of 8.375 percent bonds due in 2033 tumbled about 4 cents to 24.4 cents on the dollar as of 11:46 a.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The debt yields 34 percent, or about 30 percentage points more than similar- maturity Treasuries, Trace data show.
…
One-year credit-default swaps were quoted at a mid-price of 51 percentage points upfront, compared with 50 percentage points yesterday, CMA data show. That means it would cost $5.1 million initially in addition to $500,000 over one year to protect $10 million of GM bonds. The contracts reached as high as 52 percentage points upfront on Oct. 16.

I am certain that we are going to see a reprise of the Oshawa shuffle … Why should we subsidize them? Because they’re good jobs. Why are they good jobs? Because they’re subsidized.

A solid day for PerpetualDiscounts, up 20bp on the day to yield 6.85% pre-tax dividend, equivalent to 9.59% pre-tax interest at the standard 1.4x factor. Long corporates now yield about 7.55%, so the spread is 204bp.

There were twenty-nine other index-included $25-pv-equivalent issues trading over 10,000 shares today.

This entry was posted on Friday, November 7th, 2008 at 11:37 pm and is filed under Market Action. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.