Friday, September 18, 2009

Quick Notes & Articles for the Day - September 18

Treasury Ends Money Market Guarantee Program - The Treasury Department has officially ended its year-old program to guarantee money market mutual funds. The guarantee program was established a year ago after The Reserve Fund "broke the buck" and was priced at $0.97 versus $1.00. The fund suffered a run on its assets due to losses connected with Lehman Brothers' failure. The government's guarantee program helped stabilize fund assets as investors began adding more cash to the funds. "The guarantee program for money market mutual funds served its purpose of adding stability to the money market mutual fund industry during market disruptions last fall and ultimately delivered a healthy return to taxpayers," Treasury Secretary Timothy Geithner said. Treasury has had no losses under the program and earned roughly $1.2 billion in participation fees.

Barclays Changes Interest Rate Predictions - Economists at Barclays Capital on Friday upwardly revised their US GDP forecast and said they now expect the Federal Reserve to deliver its first rate hike in September 2010. Barclays had previously expected the Fed to remain on hold through the end of next year. They expect GDP to grow at a 5% rate in the first quarter "before settling in to a more sustainable, but still above-trend, pace." With the Fed likely to deliver further hikes in 2011.

Bank of Mexico Leaves Rates Unchanged - The Bank of Mexico on Friday kept its monetary policy rate at 4.5% for the second straight month. The Mexican peso edged up against the U.S. dollar, with one dollar buying 13.211 pesos.


Fed to Propose Wide-Ranging Bank Pay Rules - By Alister Bull - Reuters - "The U.S. Federal Reserve is close to proposing wide-ranging rules on bankers' pay that would apply to any employee able to take risks that could threaten the safety and soundness of the institution, a Fed source said on Friday."

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