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(CEP News) - Short-dated T-bills sold off after the Federal Reserve announced a new facility to assist the commercial paper market. Broader sentiment initially jumped as well but the move was short-lived and equities are trading at session lows.
The Fed introduced the Commercial Paper Funding Facility to purchase three-month unsecured and asset-backed commercial paper directly from issuers. Strategists want more detail but markets applauded the decision. Overnight, U.S. commercial paper yields fell to 2.94% from 4.57%, according to Bloomberg. Three-month T-bills - the gauge for no-risk investments - rose to 0.99% from 0.61%. Toronto's S&P/TSX composite index is down 77 points to 10153, the Dow Jones industrial average down 143 points to 9812, the S&P 500 down 18 points to 1039 and the Nasdaq down 36 points to 1827. European stock markets closed with the Eurostoxx up 4 points to 2527, the UK FTSE 100 up 16 points to 4605 and the German DAX down 60 points to 5327. U.S. two-year yields are up 3.9 bps to 1.47%, with five-year yields up 1.9 bps to 2.46%, 10-year yields up 2.7 bps to 3.48% and 30-year yields up 0.8 bps to 3.98%. The Eurodollar March 09 contract is down 11.5 ticks to 97.75. The yield curve is flatter, with the 10/2-year spread down 1.0 bps to 201.44 bps. Yields on two-year Canadian government bonds are up 6.0 bps to 2.30%, with five-year yields up 4.2 bps to 2.77%, 10-year yields up 4.7 bps to 3.48% and 30-year yields up 3.3 bps to 4.02%. The December 08 BAX contract is down 1.5 ticks to 97.56. In Germany, returns on two-year German bonds are up 11.8 bps to 3.18%, with five-year yields up 6.8 bps to 3.47%, 10-year yields flat at 3.75% and 30-year yields down 8.2 bps to 4.12%. Yields on UK two-year bonds are down 6.8 bps to 3.60%, with five-year yields up 2.8 bps to 3.88%, 10-year yields up 2.2 bps to 4.24% and 30-year yields up 2.5 bps to 4.25%. The Canadian dollar is down 0.0083 to 0.9025 against the U.S. dollar (1.1077 USD/CAD) and down 0.43 to 92.21 against the yen. The U.S. dollar is up 0.34 to 102.16 against the yen and the Dollar Index is down 0.633 to 81.042. The euro is up 0.0104 to 1.3606 against the U.S. dollar, up 0.0229 to 1.5072 against the Canadian dollar, up 0.0036 to 0.7778 against the pound sterling and is higher by 1.50 to 138.98 against the yen. The pound sterling is up 0.0058 to 1.7499 against the U.S. dollar and up 0.0208 to 1.9382 against the Canadian dollar. WTI crude oil is up $1.22 to $89.03. The front month gold contract at the Chicago Board of Trade is up $6.50 to $873.00 per ounce. All data taken at 12:41 p.m. EDT. By Adam Button,
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, edited by Stephen Huebl,
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