Market information Thursday December 17th

The Fed has announced to raise for the first time since 2006 the Fed Funds rate by 25 basis points to 0.25% – 0.5%. The Fed believes that the recovery of the labor market is now sufficiently advanced and that the rest of the economy is functioning properly. The markets have reacted positively to the rate hike. Yesterday, the DJIA, S&P500 and Nasdaq closed more than one percent higher.

Credit rating agency Fitch, downgraded the credit rating of Brazil from BBB- to BB + with a negative outlook. Fitch is, after Standard & Poor’s, the second rating agency that downgrades the country below investment grade status while Moody’s is reconsidering its credit rating. Fitch gives three reasons for the downgrade: the recession is deeper than anticipated, the deterioration of public finances, and the political uncertainties that could undermine the ability of the government to improve finances.

Yesterday, the market reacted positively to the approval of the Greek parliament on further economic restructuring measures. Yields on two-year government bonds declined with 159 bps to 7.1% and the ten-year rate dropped by 49 bps to 7.99%. Also the Athens Stock Exchange closed with a gain of 3.1%.

The 6M Euribor remained unchanged at -0.04%. The 10Y Swap increased with 1 bp to 0.98%.

In the attachment, today’s market data on money and capital market rates as well as other rates are presented. For more history of these rates or other rates feel free to ask: update@zanders.eu.