Brighter Outlook on Fed Policy Helps Prices Rise; Decline in Banks' Discount Window Borrowings Undercuts Pessimism on Interest Rates

Duffy, John J., American Banker

The U.S. Treasury securities market emerged from a turbulent week Friday with prices rising and yields falling as traders became convinced that the pervasive pessimism over the outlook for interest rates has been overdone.

Prompting the late-week change of heart was data from the Federal Reserve Board that seemed to imply that the central bank is not placing any greater pressure on short-term interest rates to rise now than it ws a month ago, when the rapid growth in the money supply first began to stir fears of a tightening of monetary policy.

Specifically, the data showed that bank borrowings at the Fed's discount window amounted to only $419 million a day in the latest week, down substantially from the previous week's daily average of $678 million.

The Fed's figures on bank borrowing are routinely scrutinized by credit market analysts as an indicator of how generous monetary officials are being in providing …

Questia, a part of Gale, Cengage Learning. www.questia.com
Publication information: Article title: Brighter Outlook on Fed Policy Helps Prices Rise; Decline in Banks' Discount Window Borrowings Undercuts Pessimism on Interest Rates. Contributors: Duffy, John J. - Author. Magazine title: American Banker. Volume: 150. Publication date: March 11, 1985. Page number: 14. © 2009 SourceMedia, Inc. COPYRIGHT 1985 Gale Group.

This material is protected by copyright and, with the exception of fair use, may not be further copied, distributed or transmitted in any form or by any means.