* ECB allocates only eighteen bln euros at 6-mth proposal * Enough to keep Eonia pinned for time being * But upside risks seen in second half of year By Kirsten Donovan LONDON, Mar 31 (Reuters) - Excess liquidity in the eurozone is set to safeguard short-term rates stay low until Jul eventhough banks took far less income than approaching at the EuropeanCentral Bank"s last proposal of longer-dated supports on Wednesday, . Banks took eighteen billion euros at the tender. Analysts hadexpected direct of around 70 billion euros in the operation,where banks were on trial to get all the supports they bid for.[ID:nLDE62U0WD] However, the allotted volume was enough, analysts said, tokeep the Eonia overnight rate EONIA= around the stream 0.35percent, at slightest until scarcely half a trillion euros of 1-yearfunds matures at the finish of June. "There is still a lot of superb liquidity in themarket and people are holding on to that," pronounced Societe Generaleeconomist James Nixon. "It only equates to banks are not receiving some-more precautionarysteps. The big regard in the marketplace is still what happens whenthe 12-month expires in July." Going in to the tender, analysts pronounced the income lookedexpensive for majority banks, with 6-month Eonia rates at 0.45percent EUREON6M= and a miss of the arbitrage opportunitiesthat have upheld direct at prior longer-dated tenders. Traders additionally pronounced banks of viewed decent peculiarity couldaccess unsecured supports for around 0.6-0.7 percent in the moneymarkets. If banks no longer need additional appropriation it could signalupwards vigour on Eonia fixings in the second half of theyear, notwithstanding the ECB pledging to keep assembly direct for1-month and 1-week income until at slightest October. "Clearly fewer banks are saying the risks of liquidityshortages so risks obviously are they won"t direct that volume ofmoney once the 442 billion euros mature, so there are upsiderisks to Eonia fixings," pronounced Commerzbank rate strategistBenjamin Schroeder. Benchmark three-month euro Libor rates EUR3MFSR= bound ata new low of 0.57750 percent [ID:nEAP000043]. Euribor futures <0#FEI:> came off their highs after thetender, with the majority actively traded Dec stipulate FEIZ0retreating from a stipulate high at 98.950. It was last at98.910, up half a parasite on the day. Benchmark dollar appropriation costs USD3MFSR= rose again, totheir top in 6-months, as banks paid up for dollars with theFederal Reserve already on the liquidity withdrawal path. While couple of analysts design the Fed to lift seductiveness ratesfrom stream levels nearby 0 any time soon, the Fed has alreadywound down a little of the puncture lending programmes and somecash has been private from the complement around special sales of billsfrom the Treasury Department"s Supplementary Financing Program.
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