1 / 16

The Fed Challenge Rony Byas, Tina Byrne, Tashdid Hasan, Changhyon Hwang, Vincent Lo November 10, 2008

parry
Download Presentation

The Fed Challenge Rony Byas, Tina Byrne, Tashdid Hasan, Changhyon Hwang, Vincent Lo November 10, 2008

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

    2. In the first quarter of 2008, economic growth was off to a slow start at 0.9%. It picked up pace in the second quarter which an increase in GDP of 2.8% largely due to a rise in exports, decreased imports, and increased spending in the public and household sectors. Residential fixed investment remains the biggest drag on GDP growth with a decrease of 13.3%, but this is a smaller decrease compared to 25.1% in the first quarter. In the first quarter of 2008, economic growth was off to a slow start at 0.9%. It picked up pace in the second quarter which an increase in GDP of 2.8% largely due to a rise in exports, decreased imports, and increased spending in the public and household sectors. Residential fixed investment remains the biggest drag on GDP growth with a decrease of 13.3%, but this is a smaller decrease compared to 25.1% in the first quarter.

    4. Consumer Spending Continues to Decrease Monthly and YoY % Change

    9. Housing Prices Have Been on a Gradual Decline Case-Shiller 10 and 20 Composite YoY %

    10. U.S. Home Foreclosure Filings on the Rise Monthly Change

    11. Housing Problems Concentrated in Key Areas of the Country

    12. Difference Between 3-Month LIBOR Rate and 3-Month Treasury Yield The TED spread fluctuates over time but historically has often remained within the range of 10 and 50 basis points (0.1% and 0.5%), until 2007. During 2007, the Subprime mortgage crisis ballooned the TED spread to a region of 150-200bps. On September 17, 2008, the record set after the Black Monday crash of 1987 was broken as the TED spread exceeded 300bps. Some higher readings for the spread were due to inability to obtain accurate LIBOR rates in the absence of a liquid unsecured lending market. On September 29, 2008, the TED spread achieved a new high of just over 350bps. On October 3, the TED spread reached another new high of 388bps.The TED spread fluctuates over time but historically has often remained within the range of 10 and 50 basis points (0.1% and 0.5%), until 2007. During 2007, the Subprime mortgage crisis ballooned the TED spread to a region of 150-200bps. On September 17, 2008, the record set after the Black Monday crash of 1987 was broken as the TED spread exceeded 300bps. Some higher readings for the spread were due to inability to obtain accurate LIBOR rates in the absence of a liquid unsecured lending market. On September 29, 2008, the TED spread achieved a new high of just over 350bps. On October 3, the TED spread reached another new high of 388bps.

    13. Commercial Paper Market in Distress

    16. Inflation Expectations Have Been Easing 10-Year TIPS Spread

More Related