Money Market News

Global Market Spending by US consumers rose in February at the slowest pace in more than a year. The 0.1 percent increase followed a 0.4 percent gain in January. The report also showed the Federal Reserve's most closely watched measure of inflation cooled. Falling home prices, job losses and higher gasoline prices are driving down consumer spending. As the figures released, J.C. Penney Co. cut its sales and earnings forecasts. The consumer sentiment index decreased to 69.5 from 70.8 and down from a preliminary reading of 70.5. The figure was less than analysts anticipated. Treasury notes strengthened, with the benchmark 10-year note yielding 3.44 percent down from 3.53 percent late yesterday. The Standard & Poor's 500 Retailing Index closed 2.7 percent lower. The core price measure rose 0.1 percent last month and up 2 percent from February 2007. The year-over-year increase matched the downwardly revised gain in January. The savings rate improved to 0.3 percent from a minus ...

Global Market Chairman of Bear Stearns Cos. sold his shares in the crippled securities firm for $61 million prior to a vote on the company's pending takeover by JPMorgan Chase & Co. He sold 5.66 million shares at $10.84 apiece. The value of his stake plummeted from almost $1 billion last year, when the shares peaked at $171.50 before the collapse of the subprime mortgage market toppled two of the firm's hedge funds and prompted a contraction in credit markets worldwide. He led Bear Stearns as CEO for 15 years until January, when he stepped down after Bear posted the first loss in its 85-year history. Once the biggest underwriter of mortgage-backed bonds, the company was forced to seek funding from the Federal Reserve and then submit to a takeover by JPMorgan after a run on the securities firm drained cash reserves. JPMorgan is paying $10 a share. Bear Stearns had no comment on why or to whom Cayne sold his stock. Last weekend Bear Stearns's board said its members would ...

Global Market Even as government insists it won't risk public funds in a bailout, American taxpayers may already be liable for billions of dollars stemming from Federal Reserve and Treasury efforts to quell a financial crisis. History suggests the Fed may not recover some of the almost $30 billion investment in illiquid mortgage securities it received from Bear Stearns Cos. Treasury's push to have Fannie Mae and Freddie Mac buy more mortgage bonds reduces the capital the government-chartered companies hold in reserve at a time when foreclosures and defaults are surging. Senators are promising to investigate. Fed and Treasury were forced to respond after capital markets seized up and Bear Stearns faced a run by creditors. In an emergency action that jeopardizes the dividend it pays the Treasury, the Fed authorized a $29 billion loan against illiquid mortgage backed securities from Bear Stearns that will be held in a Delaware corporation. JPMorgan Chase & Co. contributed $1 b...

Global Market U.S. consumer confidence fell more than forecast in March as US outlook for the economy dropped. The Conference Board's confidence index fell to 64.5. A report from S&P/Case-Shiller showed home prices in January fell by the most on record. Declining stock and property values have unnerved US, heightening concern spending will falter. A drop in spending would deepen what economists say is almost certainly the second recession of the decade. The Conference Board's gauge of expectations slumped to 47.9, the lowest since December 1973, when the Watergate scandal and an embargo by oil exporters was in effect. Retail sales fell 0.6 percent, the second decline in three months. Consumer spending may grow at an annual rate of 0.5 percent this quarter. Most U.S. stocks rose led by a rally among commodity producers. The S&P 500 index increased 0.2 percent to close at 1,353. Home prices fell in January give a sign that the housing recession is deepening. The S&P/C...

Global Market The Federal Reserve further expanded its role as a backstop to Wall Street dealers, setting up a new company to manage and sell $30 billion of Bear Stearns Cos. assets. In disclosing terms of a financing arrangement to speed JPMorgan Chase & Co.'s purchase of Bear Stearns, it hired BlackRock Inc. to oversee and sell the assets, which will be placed in a new company created by the central bank. Fed trying to restore confidence to financial markets by averting a collapse of Bear Stearns, is pushing the central bank into new territory. It shows the Fed acting like a bank liquidator for Bear Stearns. The Fed agreed to help JPMorgan acquire Bear Stearns after a run on Bear. In an effort to shore up other firms, it also agreed to become lender to all 20 primary dealers in Treasury notes. The Fed would provide financing to JPMorgan for $30 billion of Bear Stearns assets. It also released terms of the funding managed by BlackRock. The Fed said JPMorgan will shoulder the f...

Global Market The Federal Reserve bypassed their emergency-lending policies to let securities firms borrow at the same interest rate as commercial banks as the central bank tried to stave off a financial-market meltdown. The 2002 guidelines say the Fed should charge non- banks more than the highest rate that commercial banks pay. Backstopping securities firms represent the central bank's first lifelines to institutions other than banks since the Great Depression. Fed raced to unveil the steps before the Tokyo Stock Exchange opened on March 17. The Fed action is timed to complement rescue of Bear Stearns, a cut in discount rate and the opening of borrowing Treasury securities. It was the Fed's most aggressive response. The Fed will give the procedure of how much banks and securities firms are borrowing under the new programs when it releases weekly money supply data. The Fed reduced the primary discount rate to 2.5 percent. The secondary rate is a half-point higher, at 3 percent...

Global Market Federal Reserve bucked investor bets on a deeper interest-rate cut without spoiling the biggest U.S. stock-market rally. They lowered their benchmark rate by 0.75 percentage point. The Federal Open Market Committee left the door open for further reductions. At the same time, it restored language saying inflation has picked up. The Standard & Poor's 500 Index climbed 4.2 percent to 1,330.74. The dollar staged its biggest rally against the yen after the decision. Treasury notes declined. The regular meeting came two days after emergency moves to lower the discount rate by a quarter-point and become a lender of last resort for the biggest Wall Street dealers. They have spent the past week striving to prevent a global financial-market meltdown after a run on Bear Stearns Cos. Analyst had forecast a full percentage-point reduction. While the decrease was smaller than expected, Fed already made the largest reductions in the federal funds rate. Stock markets in the U.S. ...

Global Market The Federal Reserve cut rate by three-quarters of a percentage point to 2.25 percent, Fed try to prop up the faltering economy and restore the U.S. financial system. Fed is struggling to cushion consumers and companies from the worst of the credit freeze that's made some of the world's biggest banks reluctant to lend to each other. Officials also renewed concern about inflation, so they making a smaller reduction than anticipated. Stocks extended their rally, pushing the Standard and Poor's 500 Index to 1,330.74. The dollar rose against the yen. The Fed also voted to lower the discount rate to 2.5 percent. The decision follows emergency actions by the U.S. central bank, which has pushed its $900 billion balance sheet into the front lines of market turmoil to quell a collapse of brokerage firms and market making in mortgage-backed securities. The Fed has lowered its benchmark rate six times and the discount rate eight times since the collapse of U.S. subprime m...

Global Market JPMorgan Chase & Co. surged in New York trading after striking a deal backed by the Federal Reserve to buy Bear Stearns Cos. for $2 a share, 90 percent less than the 85-year old firm's market value last week. JPMorgan rose $3.86 to $40.44 at while the Amex Securities Broker/Dealer Index fell 10 percent. The bank said it will pay about $240 million for the transaction in which the Fed will guarantee $30 billion of Bear Stearns's less-liquid assets. JPMorgan bought Bear Stearns for less than the value of its real estate after speculation about a cash shortage, withdrew $17 billion in two days. Faced with the prospect of bankruptcy, Bear Stearns was forced to accept the deal less than five days after he assured investors that the company's liquidity was sufficient to weather credit-market losses. Shareholders of Bear Stearns will get stock in JPMorgan equivalent to about $2 a share, compared with $30 at the close on March 14. The Fed announced minutes later t...