Monday, June 14, 2010

The Interest Rate World is a Strange Place

Mike Dunton at Mt McKinley bank emails:

First Fed term auction is today.  It’s for 14 days.  Let’s see, the one month and the three month are below 10 bps, the 6 month is at around 14 bps, and the one year is at 28 bps.  If I leave my money overnight at the Fed I get 25 bps.  How do I bid on 14 days with rates going upside down like this?
The world is a strange place!

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