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Post by brosin on Apr 9, 2012 15:33:16 GMT -5
In all the excitement today, I dropped the ball on this. Not only hadn't I looked, but my jaw dropped right now when seeing it about as far as the FFR did over the weekend.
It was "OMG Bearish" (one step above uberbearish) to .12% from .15% - this is the real deal since it's not a quarter end rebalance or anything like that. Just some good old fashioned fear.
Was the jobs report really that bad that now everyone is literally running for the hills? Maybe it was the EU stuff on 60 minutes too, hard to say. Whatever it is, things don't look great on the lending front all of a sudden. I'll be hoping to see it bounce back later in the week or at the very least once tax day is over.
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Post by tendermyshares on Apr 9, 2012 15:42:45 GMT -5
Wait, it was .15% last week, then .075%, on market closed Good Friday, but now .15% again is OMG bearish? There's something I'm not getting, can you explain? Wouldn't this morning's number be predicated on the Friday jobs number which was ultimately partially digested by the market over the course of the day -- until the end? In other words, it's stayed exactly the same from Thursday night until this morning? It was level overnight at .15%, but the low bounced back really big to hit that .07% level again which is a great sign. Have a nice long holiday weekend everyone! |
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Post by brosin on Apr 9, 2012 15:47:26 GMT -5
When was it .075%?
It moved from Friday's .15% # to .12% today
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Post by tendermyshares on Apr 9, 2012 16:00:26 GMT -5
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Post by brosin on Apr 9, 2012 16:21:28 GMT -5
Each day there is a low, a high, and an average. Friday's average was .15% while the low was .07%. Unless there is something notable about the low, I post the average each day.
A -.03% move of the average is not something that has happened more than a handful of times since 2008.
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Post by tendermyshares on Apr 9, 2012 16:31:05 GMT -5
OK, thanks, that's something I clearly don't get about the Fed Funds Rate. At what time is the average rate known? Friday at 2p.m. I thought you were talking about the rate being .07, but I see now you were saying that was the overnight low, but you never seemed to say the average was higher. I'm not sure why there even was one on Good Friday!>  On Friday, you also said "52 week high", did you mean 52 week low? quote author=brosin board=exchange thread=33712 post=305445 time=1333738156]Nope it's right - that .07% is the low for the night (trades in a range). 52 wk high, very nice to see[/quote] Each day there is a low, a high, and an average. Friday's average was .15% while the low was .07%. Unless there is something notable about the low, I post the average each day. A -.03% move of the average is not something that has happened more than a handful of times since 2008. |
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Post by huh? on Apr 9, 2012 16:33:11 GMT -5
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Post by tendermyshares on Apr 9, 2012 16:36:58 GMT -5
I'm looking at the page. I see the number and partially understand what they represent. However, on Friday we were saying .07 was really great, but today that a drop from .15 to .12 was super bearish? Yet apparently in this case the overnight low was .04, so if an overnight low of .07 was great, wouldn't .04 be even greater
Maybe I can take a step back and confirm -- it seems like we are saying a drop in overnight fed funds rate is bad, is that right or wrong? And the data I see for 4/6 means the most recent overnight data even though today is 4/9?
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Post by tendermyshares on Apr 9, 2012 16:44:11 GMT -5
Oh, wait, wait I'm getting this, hang on.
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Post by tendermyshares on Apr 9, 2012 16:49:31 GMT -5
This doesn't mean what I thought it meant: It was level overnight at .15%, but the low bounced back really big to hit that .07% level again which is a great sign. Have a nice long holiday weekend everyone! OK so that means the average overnight level for Friday morning was .15%, and the low was .07%, which is higher than the previous low of .05% that it "bounced back from". Now we are saying that today the overnight average was .12%, which is a big decrease from Friday's average of .15%, and I see last night's overnight low was .04%, which is even lower than Wednesday's overnight low of .05%. I think I have that right now, please correct me if I'm wrong. What I'm still not sure about is: 1) So when I see the date of 4/6 on the chart, that refers to the rate when, Sunday night through Monday morning, since 4/6 was the day before a weekend? Or probably just for Monday morning premarket. 2) The 52 week high mentioned on Friday refers to the overnight low of .07% being the highest overnight low in 52 weeks, correct? 3) Higher Fed Funds rate numbers are bullish because why? Because it shows more interest/demand in borrowing thus causing a higher rate? Does it also indicate inflation? The only other thing I'd add here is: If today's overnight rate was bearish, wouldn't that be because of the job numbers on Friday morning, which weren't reflected in Friday morning's rate, and we could probably expect an improved rate Tuesday morning if we don't get further negative economic data -- so we can't necessarily say it's a trend? How'm I doing so far? Thanks for your patience. |
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Post by huh? on Apr 9, 2012 17:09:30 GMT -5
Tender, Yes and Yes on ?'s 2 and 3.
As for the dates in ? 1, Bros can be clearer on that. I'm not sure of the evenings being represented by the date given over a weekend.
Lastly, I don't think higher lending rates alone cause inflation.
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Post by tendermyshares on Apr 9, 2012 17:11:41 GMT -5
Thanks, I wasn't thinking that higher rates necessarily caused inflation but that they might be reflective of it, or correlating with it. I guess the numbers are traditionally dated the previous day because it's an overnight rate. I'm wondering during what hours the rate is established, and whether it stops changing premarket or continues to change throughout the day but is only reflected as an overnight rate. I know I've heard "overnight" used before in terms of borrowing, but are banks borrowing money from the Fed at 3 a.m.? Tender, Yes and Yes on ?'s 2 and 3. As for the dates in ? 1, Bros can be clearer on that. I'm not sure of the evenings being represented by the date given over a weekend. Lastly, I don't think higher lending rates alone cause inflation. |
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Post by huh? on Apr 9, 2012 17:23:16 GMT -5
Thanks, I wasn't thinking that higher rates necessarily caused inflation but that they might be reflective of it, or correlating with it. I guess the numbers are traditionally dated the previous day because it's an overnight rate. I'm wondering during what hours the rate is established, and whether it stops changing premarket or continues to change throughout the day but is only reflected as an overnight rate. I know I've heard "overnight" used before in terms of borrowing, but are banks borrowing money from the Fed at 3 a.m.? Tender, Yes and Yes on ?'s 2 and 3. As for the dates in ? 1, Bros can be clearer on that. I'm not sure of the evenings being represented by the date given over a weekend. Lastly, I don't think higher lending rates alone cause inflation. Warning: You have now exceeded my limited knowledge on this expansive topic. Please consult error code: SYNTAX COMPREHENSION ERROR LMMSDNFKJUHYFKLXJVCJLKDMFKLUTG:OPIOPIWERLKKDFKM-4325 [insert BSOD here] LOL. Bros will have to chime in here. |
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Post by tendermyshares on Apr 9, 2012 17:32:59 GMT -5
Wow, that error message is almost as bad as the IIF saying today that more countries need to pass collective action clauses in case of the need for further bond haircuts. Thanks, I wasn't thinking that higher rates necessarily caused inflation but that they might be reflective of it, or correlating with it. I guess the numbers are traditionally dated the previous day because it's an overnight rate. I'm wondering during what hours the rate is established, and whether it stops changing premarket or continues to change throughout the day but is only reflected as an overnight rate. I know I've heard "overnight" used before in terms of borrowing, but are banks borrowing money from the Fed at 3 a.m.? Warning: You have now exceeded my limited knowledge on this expansive topic. Please consult error code: SYNTAX COMPREHENSION ERROR LMMSDNFKJUHYFKLXJVCJLKDMFKLUTG:OPIOPIWERLKKDFKM-4325 [insert BSOD here] LOL. Bros will have to chime in here. |
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Post by brosin on Apr 9, 2012 18:20:25 GMT -5
Maybe I can take a step back and confirm -- it seems like we are saying a drop in overnight fed funds rate is bad, is that right or wrong? And the data I see for 4/6 means the most recent overnight data even though today is 4/9? This will help answer 2 things right away. The dates are the first confusing thing. For reasons unknown to me other than just to confuse us all, they use the date of the night when the trading started, not the date that it ended. So for example, Friday's trading started at around 4-5 PM ET (not sure the exact time) and goes through this morning Monday when it releases the data at 8 am ET. So the release today was for the overnight of Fri 4/6 - Mon 4/9, but it shows on their data as 4/6.  The other thing you asked about is the good vs bad part. Rates going up is a good sign that banks are lending to each other and the Fed can start pulling money out of the system (which raises the rate). Rates going down is a sign that the Fed is needing to pump money into the system for whatever reason since banks aren't lending - bad sign. If the average moves .01% up or down one day, that's a decent move. A .03% move is very rare and signals something happened that was unexpectedly good or unexpectedly bad. In this case, it moved down -.03%, suggesting that lending was caught very much offguard in a bad way. In your following post, as Huh? said, your #2 and #3 were correct. #1 is that weird date thing which is the most confusing thing about it all - especially when you try to go back in the data and see what things happened what days (you basically have to subtract 1 business day from it)  |
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Post by tendermyshares on Apr 9, 2012 21:45:55 GMT -5
Great, thanks Bros. I learned a lot from this thread today.
The only thing is I would still think the rate change would be reflective of the Friday morning news and not necessarily of a trend or anything new today.
Now I expect those Fed Funds numbers bright and early going forward, Sir!
-- or maybe I just go look at the site.
Is there a particular time they are usually posted?
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Post by tarzan on Apr 9, 2012 22:06:20 GMT -5
I didn't realize it was an average rate - I'm guessing for a 24hr period. Curious, the lows tms mentions. Could it be part of the dollar swap measures?? FED offering favorable rates to entice use of the "mechanism"?
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Post by brosin on Apr 9, 2012 22:52:38 GMT -5
Great, thanks Bros. I learned a lot from this thread today. The only thing is I would still think the rate change would be reflective of the Friday morning news and not necessarily of a trend or anything new today. Now I expect those Fed Funds numbers bright and early going forward, Sir! -- or maybe I just go look at the site.Is there a particular time they are usually posted? Yep you can register on the Fed site - go to that link that Huh? posted and you should be able to find it. The daily email comes about 8 am ET |
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Post by brosin on Apr 9, 2012 22:54:42 GMT -5
I didn't realize it was an average rate - I'm guessing for a 24hr period. Curious, the lows tms mentions. Could it be part of the dollar swap measures?? FED offering favorable rates to entice use of the "mechanism"? Yeah there's always been a lot of discussion about who is taking cash at whatever they can get it at (the lows signal the most panic'd participants). A lot think it's Fannie&Freddie - was a lot more scary when the low was .01% (it even started being put out at .010% so I thought that meant it was going to the 3rd decimal pt (technically the 5th since it's a percentage). So this is like a whole new ball game up in these "decent" levels ;D |
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Post by tendermyshares on Apr 9, 2012 22:59:39 GMT -5
Oh dear, I'm confused again. Is this not banks borrowing from the Fed? So wouldn't banks borrowing at higher rates be the desperate ones? I presume I'm wrong about this, so indeed, who is lending money to whom? I can't imagine the lender would be panicking and thus lending money at a very low rate? Or in other words, in what way do the lows indicate the most panicked participants? I didn't realize it was an average rate - I'm guessing for a 24hr period. Curious, the lows tms mentions. Could it be part of the dollar swap measures?? FED offering favorable rates to entice use of the "mechanism"? Yeah there's always been a lot of discussion about who is taking cash at whatever they can get it at (the lows signal the most panic'd participants). A lot think it's Fannie&Freddie - was a lot more scary when the low was .01% (it even started being put out at .010% so I thought that meant it was going to the 3rd decimal pt (technically the 5th since it's a percentage). So this is like a whole new ball game up in these "decent" levels ;D |
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Post by brosin on Apr 9, 2012 23:19:59 GMT -5
Oh dear, I'm confused again. Is this not banks borrowing from the Fed? So wouldn't banks borrowing at higher rates be the desperate ones? I presume I'm wrong about this, so indeed, who is lending money to whom? I can't imagine the lender would be panicking and thus lending money at a very low rate? Or in other words, in what way do the lows indicate the most panicked participants? Yeah there's always been a lot of discussion about who is taking cash at whatever they can get it at (the lows signal the most panic'd participants). A lot think it's Fannie&Freddie - was a lot more scary when the low was .01% (it even started being put out at .010% so I thought that meant it was going to the 3rd decimal pt (technically the 5th since it's a percentage). So this is like a whole new ball game up in these "decent" levels ;D It's a 2-pronged thing. Fed Funds is the rate at which banks are lending to *eachother.* However that is what spurs the Fed to inject cash into the economy based on how much lending (or lackthereof) they are seeing. The Fed injecting cash (at same time buying treasuries with that cash) has the effect of lowering rates in addition to what is going on in the open FFR market. Think of it like Treasuries - a "free" market with an 800 lb gorilla in the room |
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Post by tendermyshares on Apr 9, 2012 23:28:10 GMT -5
Sure, but you said their has always been discussion about who is taking cash at whatever they can get it at (which would imply they are paying a premium), and that the interest rate lows represent desperate participants, whom I would assume would be those those who are taking cash at whatever they can get it at. A lower interest rate would be getting cash at a good deal, wouldn't it? And having to take it at a higher rate would be desperation? Not sure how/if your info about the bond buying plays into that question.
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Post by cosmic on Apr 10, 2012 9:28:33 GMT -5
I think it's like a market making setup tender.
The Fed increases the rate when it can, because, well, it can, i.e. there's demand, and a market for lending interbank. When that market dries up, the rates go down, when it gets hot, the rates go up - just like a market maker manipulating a stock on L3.
The throttle is higher rates, if the economy overheats and the rate rises too quickly, it chokes off.
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