Money markets treasury bills near flat as investors fret← Homepage
NEW YORK, Sept 25 Yields on U.S. Treasury bills barely budged on Tuesday as Europe's ongoing debt crisis and upcoming U.S. elections kept investors from moving into riskier assets. The interest rate on overnight repurchase agreements traded flat, as well."There's so much indecision that it's difficult to do anything," said Kim Rupert, managing director of global fixed income analysis at Action Economics LLC in San Francisco. Between the U.S. presidential election and the continuing euro zone debt crisis, she said, investors see little reason to buy risk. That leaves bills as a safe haven - but with little return."Bills aren't yielding anything and aren't going to yield anything," she said. "They're going to be stuck in a range if the Fed maintains its through-2015 low rate scenario."Yields on three-month bills traded at 0.112 percent. Yields on six-month bills traded at 0.141 percent. The interest rate on overnight repos was last quoted at 0.31 percent on Tuesday, flat from Monday.
Also in shorter-dated debt markets, the Treasury sold $40 billion of four-week bills at a high rate of 0.055 percent. In addition, an auction of $35 billion in new two-year notes priced at a high yield of 0.273 percent, around a third of a basis point below where the notes traded before the sale, in solid but unsurprising demand. The Treasury will sell an additional $35 billion in five-year notes on Wednesday and $29 billion in seven-year notes on Thursday.
In Europe, after a slight dip in August on primarily seasonal effects, volumes in the euro zone overnight Eonia rates market have inched higher this month and on one day last week topped 30 billion euros for the first time since April. This, to some analysts, is a sign banks are widening the list of counterparties they choose to lend to as record low rates prompt them to take more risk to increase returns on their cash. Daily average Eonia volumes for September are 25.7 billion euros, compared with 20.9 billion in August, 23.7 billion in July and 23.5 billion in June, according to Reuters data. In September 2008, before the financial crisis froze interbank lending, daily Eonia volumes reached more than 70 billion euros.
LIBOR PROPOSAL EXPECTED In unsecured lending, the London interbank offered rate on three-month dollars slid to 0.36350 percent, its lowest in about a year, from 0.36725 percent on Monday. Markets are expecting a proposal from Martin Wheatley, a top UK regulator, on Friday stripping the British Bankers' Association of its supervisory role in setting the hugely influential benchmark rate. In a statement on Tuesday, the association said it would support such a change in responsibility for Libor. was happy to hand over the task to regulators, days ahead of an expected UK proposal to take tighter control of the scandal-tainted benchmark. Libor - or the London Interbank Offered Rate - underpins global trade, but has been engulfed in controversy since Barclays was fined a record 290 million pounds in June for fixing it in the past.