Another normal\u00a0day! At this rate, I’m going to have to make notes\u00a0when preparing remarks about ‘What happened in August’!<\/p>\n
The Fed made it clear<\/a> that it will accept ABCP at the discount window.\u00a0This will aid in delevering the financial system since it makes it easier for the banks to buy, or to lend against, the ABCP that\u00a0has been issued in an attempt to avoid the banks. The latter process is referred to as disintermediation; I’m not sure what to call the process of reversal.<\/p>\n In related news,\u00a0two Canadian sub-prime lenders<\/a> have tightened their standards,\u00a0citing inability to\u00a0fund the loans at a\u00a0decent price.<\/p>\n There was good economic news in the\u00a0US<\/a> (especially durable goods orders) … but that was for July! Considerable uncertainty<\/a> remains over how the recent events will affect the real economy.<\/p>\n Brad Setser speculates<\/a>, based on foreign official reserves held in custody at the Fed, that private investment in emerging economies is being reduced – funds reducing risk, funds meeting margin calls.<\/p>\n On the other hand … US equities capped a fine week<\/a> with a good gain and Canadian equities did even better<\/a>. So who knows? Markets will do what markets want to do when they want to do it.<\/p>\n But in signs that many, anyway, are calming down after the panic the US bond\u00a0curve\u00a0flattened<\/a> and<\/p>\n Benchmark 10-year notes rose as traders said corporate bond sales created demand for long-term products sold earlier as hedges.<\/p>\n<\/blockquote>\n\n