The Fed funds
and T-bill rates are the monthly average of daily rates.
Before you decide on whether to invest in short- or long-term bonds, Lay recommends that you first check out the yield on the Fed funds
rate, a benchmark for bond investors, which is currently 5.
com), projects deposit rates will remain low in 2011 mainly because the Fed Funds
rate is expected to remain at its current level (0-0.
If the United States can cool its housing market with a Fed funds
rate of only 5 percent, it will greatly increase the odds of the American economy enjoying a soft landing during 2006 and 2007.
Options on CBOT fed funds
futures are quite possibly the best means available to express market opinions about what the Fed might or might not do at the upcoming meetings.
There is a negative correlation between the fed funds
rate and the price-earnings ratio, but it arises from a significant correlation of each measure with inflation.
Program users are permitted to sell federal funds while they are borrowing seasonal credit, as long as net fed funds
sales (fed funds
sold less fed funds
purchased) do not exceed the bank's normal operating pattern, that is, the pattern that existed before the bank became a seasonal borrower.
The Fed has hacked the Fed Funds
rate by 75 basis points to 0.
Eurodollar and fed funds
futures represent a bet on the risk associated with short-run interest rate changes.
Conrad believes that the Fed has already effectively cut the Fed Funds
short-term interest rates at extraordinary lows (at one point the Fed funds
rate was set at 1 percent), financial institutions would borrow on the short end of the yield curve and buy the long end, guaranteeing a nice profit even before taking any risk.
Says Shafer: "If I'm investing cash overnight, and I'm a major company, I'm likely to view the fed funds
rate as the maximum [return] I can hope for.