Tuesday, February 26, 2008

Unthawing the Deep Freeze

It seems logical that one way for investors to keep an eye on whether the credit freeze has begun to thaw is to track the Fed’s Term Auction Facility (TAF). The data to your left* shows the results for each of the TAF auctions.

Investment Strategy Implications

Along with credit spreads, the TAF results should provide useful data re signs that the freeze at the core of the banking system is beginning to thaw. An unthawing of the credit freeze will be an indicator that some semblance of normalcy is returning to the economy, which should be anticipated by the financial markets.

Based on the TAF data noted, there appears to be no sign that the thaw is underway.

*click on image to enlarge

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