Nov 11, 2008

Weekly Watch

Latest set of issues people are talking about this week:

  1. Fed's balance sheet
    The Fed's balance sheet has almost doubled in the last one year beacuse of interventions in the money markets and acceptance of a wide range of collateral against which it has been lending. Treasuries as a percentage of the Fed's balance sheet have declined sharply.. while concerns about the Fed's balance sheet have been there along, they've hit the headlines this week when Bloomberg sued the Fed.
  2. Downgrading of Emerging Market ratings by Fitch
    Fitch has recently downgraded 4 CEE economies. There are concerns that more economies may be on the line... Downgrading increases the cost of sovereign debt and in some cases may cause a balance of payments crisis if there are no takers for rolling-over of short-term debt. There should be more sovereign defaults/IMF bailouts in the coming months.. lookout for action in this space.
  3. Revision of mortgage terms
    US lenders get rational and have started revising terms of loans made earlier.. JP Morgan did it last week.. Citi's at it now.. Read the bloomberg story
  4. China's stimulus package
    China's stimulus package this week whipsawed a lot of commodity traders this week.. on announcement of the package commodities rallied around the world..only to fall back to lower levels after the rally...crude even breached $60 on Monday..

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