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 …
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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.
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