Interbank Market Scan: Latest Federal Reserve, Treasury rates of interest … and Joe Biden announces his re-election bid.

The takeaway: Joe Biden announces his re-election bid.

Today, U.S. President Joseph R. Biden announced his candidacy for president in 2024. Since taking office in January 2021, Mr Biden has for the most part steered clear of adding onerous regulation to the banking sector. On the contrary, his infrastructure legislation and the spending that flows from it should, in theory, add to the U.S. Treasury’s reserve accounts at the Federal Reserve Bank of New York.

Bonds issued by the U.S. Treasury will be exchanged for deposits into the Treasury’s master accounts at the Federal Reserve. As the Treasury’s fiscal agent, the Federal Reserve will direct funds to the appropriate government agencies responsible for implementing the President’s infrastructure plan. Agencies will then direct allocated funding to the states and/or municipalities with their shovel-ready projects and respective private contractors on the ground.

I expect Mr Biden to tout any successes stemming from the infrastructure initiative as good for the economy and that he needs another term to finish the job.

Banks are some of the hands that feed Mr Biden’s infrastructure plan. Contractors will deposit proceeds with national, regional, and local banks and use some of these proceeds as margin for securing additional funds. This is how banking works and how the contribution from the banks spread through the economy.

It would be wise of Mr Biden to facilitate the contributions of the banking system by not proposing to regulate them further.

Alton Drew

25 April 2023

Alton Drew

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The stats ….

30-Day Fed Funds Options: 95.1725

Discount Window: 5.00%

Interest on Reserve Balances: 4.90%

Effective Federal Funds Rate: 4.83%

Two-year Treasurys: 3.86%

Ten-year Treasurys: 3.40%

Bank prime rate: 8.00%

Sources: CME Group, Board of Governors-Federal Reserve System, Federal Reserve Bank of New York, U.S. Department of the Treasury.