MoneyTec.com Traders Community Forum - View Single Post - Credit crunch

Rhody Trader · 16-08-2007, 15:10

Actually, from what I heard the instigatation of this credit crunch - the one that got all the central banks pumping money into the system over the last week - was in Europe before the US open last Thursday. The feeling is that a lot of Europeans (and others) bought a considerable amount of the subprime related paper, and so they are just as tied in to this whole supposedly US-only problem. It's a global issue because risk is now distributed around the world and not just locally.

The dollar, though, is on the rise because of the flight to quality in to US Treasuries, especially T-Bills. The 3mo Bill has been down 150+ basis points over the last couple of weeks. That's going from 5% to 3.5%, which is a HUGE move. That means lots of money pouring in to the short end of the yield curve. Buying Treasuries requires aquiring USD to do so.

16-08-2007, 15:10	#3 (permalink)
Rhody Trader level 3 Join Date: Dec 2004 Posts: 103 Rep Power: 0	Re: Credit crunch - what the hell is going on? Actually, from what I heard the instigatation of this credit crunch - the one that got all the central banks pumping money into the system over the last week - was in Europe before the US open last Thursday. The feeling is that a lot of Europeans (and others) bought a considerable amount of the subprime related paper, and so they are just as tied in to this whole supposedly US-only problem. It's a global issue because risk is now distributed around the world and not just locally. The dollar, though, is on the rise because of the flight to quality in to US Treasuries, especially T-Bills. The 3mo Bill has been down 150+ basis points over the last couple of weeks. That's going from 5% to 3.5%, which is a HUGE move. That means lots of money pouring in to the short end of the yield curve. Buying Treasuries requires aquiring USD to do so.