Ok – It’s now old news that the Fed decided to cut the fed funds rate (FFR) on Tuesday a .25%. Yes, the stock market was disappointed. Mortgage bonds didn’t do anything phenomenal on the news because it was also less of a cut than they expected.
The important and should I say ‘Sexy News’ was the Fed’s announcement this morning that they will be auctioning $20 Billion on December 17th to the highest bidder. Yes, that’s a pretty big deal. The Fed has decided to step in and make a statement that they aren’t going to let this liquidity issue put good banks out of business. The advantage to bidding on this money is it will go for less than what the discount window offers banks to borrow from. It’s obvious that this money will be obtained by a large bank, the question is who. I’ll keep you posted.
Furthermore – the Federal Reserve announced that they will have three more auctions (estimated to be the same amount of money) on December 20th, January 14th and 28th.
The saga continues.. stay tuned.. this business keeps getting more and more interesting every day!
