* US 1-month bill sale captures highest bidding in a month * Dollar 3-month Libor hits record low, euro rates rise * European traders wary of ECB’s moves toward policy exit (Updates market action; dateline previously LONDON) By Richard Leong and Kirsten Donovan NEW YORK/LONDON, Nov 24 (Reuters) – The rates on most U.S. Treasury bills traded steady to slightly higher on Tuesday amid shrinking supply and intense year-end appetite for the ultra low-risk, cash-like investments. Investors snatched up $32 billion of one-month T-bills at a high rate of 0.06 percent, 1 basis point higher than last week’s auction for this maturity. See [ID;nTAR000548] Bidding for the latest one-month supply was the strongest in a month. The bid-to-cover ratio came in at 4.38, higher than 3.79 last week but below 4.62 a month ago. USAUCTION7 Fund managers who reaped profits on a rebound on Wall Street and other risky assets this year have been socking their gains into T-bills in an effort to protect them, analysts said. “Many people who made money are shutting down and putting money into riskless assets,” said Eric Lascelles, chief economics and rates strategist with TD Securities in Toronto. The tremendous bids for T-bills have occurred even at the expense of money market funds, which had traditionally been viewed as a safe haven to park cash until they were roiled by Lehman Brothers’ collapse during last year’s credit crisis. The Investment Company Institute reported money market fund assets fell $71.2 billion in October, following a $126.9 billion drop in September. For more, see [ID:nWAT013937] In the London interbank market, benchmark three-month dollar Libor rates USD3MFSR= edged to a record low of 0.26063 percent, only 1 basis point away from the top end of the Federal Reserve’s current range on its policy rate. The U.S. central bank has signaled it will hold short-term rates near zero in a bid to foster an economic recovery. On Tuesday, it released minutes of its November policy meeting, which showed policy makers are increasingly confident in a durable U.S. recovery even though they do not see employment picking up soon. For more, see [ID:nWEQ003609] EURO RATES RISE Across the Atlantic, interbank lending rates for euros edged higher with central bank exit policy in focus after the European Central Bank last week took a first tentative step toward implementing tighter monetary conditions. Three-month euro Libor rates EUR3MFSR= were marginally higher at 0.67688 percent, while one-year rates EUR1YFSR= edged up to 1.22125 percent. See [ID:nGEE5AN142] One-year euro Libor rates EUR1YFSR= edged up again after posting their biggest daily rise on Monday since early June. The ECB said last Friday it would tighten its rating requirements for banks using asset-backed securities as security in its lending operations [ID:nLAG005930]. The announcement, which analysts said may signal the start of the central bank’s exit policy, pushed six- and 12-month Eonia EUREON6M=EUREON1Y= rates higher and saw interest rate futures FEIM0FEIZ0 sell off, pushing up implied rates. “Everything the ECB has done so far has been in the guise of expansion, of getting liquidity into the market and widening the collateral base as much as possible,” said ING rate strategist Padhraic Garvey in Amsterdam. “For the first time they’ve clawed some of that back so if you were to point to the beginning (of an exit), this would be it.” Despite tougher collateral requirements, the ECB will offer long-term funds to banks, analysts said. It is expected to allot 125 billion euros in its one-year refinancing operation in December, roughly two-thirds more than the total banks took in September, according to a Reuters poll of traders released on Tuesday. For more, [ID:nGEE5AN1SJ] (Editing by Leslie Adler) ((richard.leong@thomsonreuters.com ; +1 646 223 6313; Reuters Messaging: richard.leong.reuters.com@reuters.net )) © Thomson Reuters 2009 All rights reserved The rest is here: MONEY MARKETS-U.S. bill rates hold as demand stays strong (at Reuters)
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MONEY MARKETS-U.S. bill rates hold as demand stays strong (at Reuters)
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