LIBOR Declines

The U.S. bond market is closed today for Veterans Da. So other indicators are not available today.

From Bloomberg report ;

The London interbank offered rate, or Libor, that banks charge each other for three-month loans in dollars slid 6 basis points to 2.18 percent today, the 22nd consecutive decline and the lowest level since Oct. 29, 2004, according to British Bankers' Association data.

The three-month LIBOR was at 2.24% yesterday.But it was 4.81875% at record on October 10th. This indicator shows well about credit transfers of banks. Investment should raise and i am still checking Libor out.

Big Slowdown in China

From Bloomberg: China's Economic Growth May Slump as Spending Comes Too Late

Gross domestic product may advance 7.5 percent or less, the weakest since 1990, according to estimates by Credit Suisse AG, UBS AG and Deutsche Bank AG. Royal Bank of Scotland Plc predicts the economy will grow 8 percent next year, while 5 percent ``can't be ruled out.''
...
``The golden years have shuddered to a dramatic halt,'' said Stephen Green, head of China research at Standard Chartered Bank Plc in Shanghai. Green is reviewing his 7.9 percent forecast for next year because a ``big fiscal policy package'' hasn't arrived.

If China tries to stimulate their own economy, what happens to US ? US made China's economy bigger with import. At the moment economy is going slowdown and demand vanishes. So that could have negative impact on the U.S economy as much as China.

Lets Check Indicators Today

• The yield on 3 month treasuries fell to 0.37% from 0.44%.

It was 0.44 yesterday and slightly getting worse. Usually the 3 month trades below the target Fed Funds rate by around 25 bps, so this is too low with the Fed funds rate at 1.0%. It should increase closer to the target rate. Still low.

• Libor declined again today.Three-month U.S. dollar slid 0.13 points to 2.38 percent from 2.51.

This is so good. I was waiting Libor comes below 3. Signs are slightly better. Waiting for 2 anymore.

• The TED spread 2.01, down from 2.07.

Also nice change today again. Its still too high but better than the peak of 4.63. TED spread should move back down to 2. Close again.

• USD-JPY currencies up to 97.7750.

It fell from 98.4600. Seems not well today. Markets falled and Japan Yen getting strengthen.

• Nonfinancial A2/P2 spread is down to 3.82 from 4.18.

Slightly better. But it should decline more and more.

• VIX up to 63.68.

Bad. It was 55.07 yesterday but the record was 80.6 this year. Dow slumped again today and volatility getting rise. Dangerous.

Markets on fair and real economy is weakness.So indicators are complicated.Need to be careful more than anytime.

What Happened to Indicators

• The yield on 3 month treasuries fell to 0.44% from 0.47%.

It was 0.47 yesterday and slightly getting worse. Usually the 3 month trades below the target Fed Funds rate by around 25 bps, so this is too low with the Fed funds rate at 1.0%. It should increase closer to the target rate. Still low.

• Libor declined again today.Three-month U.S. dollar slid 0.21 point to 2.51 percent from 2.72.

This is so good. I was waiting Libor comes below 3. Signs are slightly better. Waiting for 2.

• The TED spread 2.07, down from 2.33.

Also nice change today again. Its still too high but better than the peak of 4.63. TED spread should move back down to 2. Close

• USD-JPY currencies up to 98.4600.

It fell from 99.6850. Seems not well/

• Nonfinancial A2/P2 spread is down to 4.18 from 4.45.

Slightly better. But it should decline more and more.

• VIX up to 55.07.

Bad. It was 48.95 yesterday but the record was 80.6 this year. Dow slumped today and volatility getting rise.

Economic datas make us frightening and indicators show nothing about real economy for today.

ISM Services Index Declined

From the Institute for Supply Management (ISM) report ;

"The NMI (Non-Manufacturing Index) registered 44.4 percent in October, 5.8 percentage points lower than the 50.2 percent registered in September, indicating contraction in the non-manufacturing sector after two consecutive months of growth."

"Uncertainty is having the usual effect on business. Our response is traditional — stop all discretionary spending."

"Business down significantly! Discretionary spending disappearing."

As you see, consumers and businesses react to uncertainity. If business can't adjust to changes in economic conditions, it would keep going down.

Indicators Smiling

• The yield on 3 month treasuries rised to 0.47% from 0.44%.

It was 0.44 yesterday and slightly getting well. Usually the 3 month trades below the target Fed Funds rate by around 25 bps, so this is too low with the Fed funds rate at 1.0%. It should increase closer to the target rate. Still low.

• Libor declined again today.Three-month U.S. dollar slid 0.15 point to 2.72 percent from 3.03.

This is so good. I was waiting Libor comes below 3. Signs are slightly better.

• The TED spread 2.33, down from 2.39.

Also nice change today again. Its still too high but better than the peak of 4.63. TED spread should move back down to 2.

• USD-JPY currencies up to 99.6850.

It rised a little from 99.0800. One more positive change again. Going well.

• Nonfinancial A2/P2 spread is down to 4.45 from 4.58.

Slightly better. But it should decline more and more.

• VIX down to 48.95.

Great. It was 55.10 yesterday but the record was 80.6 this year. Excellent change. Volatility getting lose.

Im hopeful much more today. Indicators seem well and crisis effects on money-markets getting slow.There is more progress today.

Indicators Getting Well

• The yield on 3 month treasuries rised to 0.44% from 0.42%.

It was 0.42 yesterday and slightly getting well. Usually the 3 month trades below the target Fed Funds rate by around 25 bps, so this is too low with the Fed funds rate at 1.0%. It should increase closer to the target rate. Still low.

• Libor declined again today.Three-month U.S. dollar slid 0.17 point to 2.86 percent from 3.03.

This is so good. I was waiting Libor comes below 3. Signs are slightly better.

• The TED spread 2.39, down from 2.60.

Also nice change. Its still too high but better than the peak of 4.63. TED spread should move back down to 2.

• USD-JPY currencies up to 99.0800.

It rised from 98.5100. One more positive change.

• Nonfinancial A2/P2 spread is down to 4.58 from a record 4.72 from.

Better. But it should decline more.

• VIX down to 55.10.

It was 59.89 on friday and awesome decline from there. Volatility is getting lose. So thats great news.

As you see, we notice some progress today. And im hopeful more. But its big crisis and indicators will not show the credit crisis is over. These are just indicators that we evaluate of markets mood.

ISM Factory Index Drop

From MarketWatch:

The Institute for Supply Management reported Monday [that the] ISM index fell to 38.9% in October from 43.5% in September. This is the lowest level since September 1982.

This really sucks.

GM Turned down by Government

From NY Times ;

The Treasury Department has turned down a request by General Motors for up to $10 billion to help finance the automaker’s possible merger with Chrysler ... the Bush administration will now shift its focus to speeding up the $25 billion loan program for fuel-efficient vehicles approved by Congress in September and administered by the Energy Department.
...
While G.M. and Chrysler continue to talk, no deal is expected until the government clarifies its role, if any.

If this deal will not agree, Chrysler will probably go bankrupt. Lots of people will lose their jobs. Some lenders will be stuck with Chrysler pier loans.

GM futures up for now but we will see its change by time on markets.

PCE Declined in September

We expected as based on the advance GDP report, real personal consumption expenditures (PCE) declined sharply in September.

The YoY change in real PCE is now negative. Its the first time negative index since 1991.

Consumers lifted savings as they dealt with falling equity prices and uncertainty about their jobs.

From WSJ Online ;

Personal income rose at a seasonally adjusted rate of 0.2% compared to the month before, the Commerce Department said Friday. Income increased a revised 0.4% in August; originally, income for that month was seen 0.5% higher.

September personal consumption fell 0.3% compared to the month before. Spending had been flat in August, as originally reported.

Personal saving as a percentage of disposable personal income was 1.3% in September, up from 0.8% in August.