Recession and fears of a crash force US central bank to bolster the credit markets again, reports Ambrose Evans-Pritchard
The Federal Reserve has again been forced to step in to alleviate extreme stress in the US credit markets, pledging $200bn (£100bn) of emergency liquidity for the banking system.
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The move culminates a dramatic week that saw yield spreads on Fannie Mae and Freddie Mac agency bonds surge to the highest levels in over 20 years. A panic flight to safety across the credit universe briefly drove the yield on 2-year US Treasury notes below 1.5pc, a sign that investors may be battening down the hatches for a violent storm.
The Federal Reserve said the fresh money was needed to 'address heightened liquidity pressures'
The Fed said the fresh money was needed to "address heightened liquidity pressures in the term funding markets". ..
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