Reuters: US Dollar Report: MONEY MARKETS-U.S. short-term rates pause in wake of Fed

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MONEY MARKETS-U.S. short-term rates pause in wake of Fed Sep 24th 2012, 19:22 Mon Sep 24, 2012 3:22pm EDT * U.S. rates futures, T-bill rates little changed * Dollar Libor falls to lowest in nearly a year By Luciana Lopez NEW YORK, Sept 24 (Reuters) - Short-term U.S. interest rates were little changed on Monday as investors paused to weigh the market impact of new central bank easing in the United States and Europe. Three- and six-month bills were largely flat on the day, with yields stuck within the same ranges of recent months. The Federal Reserve earlier this month said it will pump $40 billion into the U.S. economy each month through buying mortgage-backed securities until it sees a sustained upturn in the weak jobs market. "The market is still kind of struggling to figure out what relationships should be in the context of the Fed's new policy," said Tom Simons, money market economist from Jefferies & Co in New York. "They made a really dramatic move in MBS markets. Some formerly consistent relationships between Treasuries and MBS (mortgage-backed securities) are no longer as consistent as they once were," he added. "I think it makes the market somewhat difficult to trade and I think perhaps that also contributes to sort of a lackadaisical tone to the market as a whole." U.S. federal funds futures were mostly unchanged to 0.5 basis point lower from Friday's close. The Fed's announcement followed a week after the European Central Bank agreed to launch a new and potentially unlimited bond-buying program to try to cap the region's ongoing debt crisis. But disappointing German business sentiment data on Monday underscored the long road ahead as major economies could continue lackluster for years to come, taking the shine off markets to start out the week. Investors are now looking ahead to Treasury sales of notes this week totaling $99 billion: $35 billion in two-year notes, $35 billion five-year notes and $29 billion in seven-year notes. In addition, the Treasury sold $32 billion in 3-month bills at a high rate of 0.110 percent and $28 billion in 6-month bills at a high rate of 0.140 percent on Monday. Yields on three-month bills edged down to 0.101 percent on Monday from 0.107 percent on Friday. Yields on six-month bills traded at 0.142 percent, flat from Friday's near one-month high. In unsecured lending, the London interbank offered rate on three-month dollars slid to 0.36725 percent, its lowest in almost a year. Link this Share this Digg this Email Reprints

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