Credit risk remains elevated and appetite for risk remains subdued,
though the systemic risk to financial markets is not as elevated as it
was in the spring, according to a new market update from the
International Monetary Fund.
The White House revised its 2008 budget deficit
forecast to $389 billion from $410 billion earlier in February
and its 2009 forecast to $482 billion from $407 billion, far above the
all time record of $413 billion seen in 2004.
Treasury Secretary Henry Paulson said Monday that
covered bonds are an answer to financial market’s request for clarity. He
said covered bonds, a $3 trillion market used widely in Europe for
mortgage funding, can develop without legislation in the U.S., and four
of the largest U.S. banks are already prepared to set up the market.
The U.S. government plans to issue more debt in the
current quarter than any time in history, the Department
of Treasury said on Monday.
In an interview with the Financial Times over the weekend, Minneapolis
Fed President Gary Stern (voter) said the credit
crunch in the U.S. would last for several more months and
conditions could deteriorate further.
The U.S. dollar was mixed on a quiet day on Monday,
making gains solely against the underperforming Canadian dollar and
British pound.
In a rare weekend meeting, the U.S. Senate passed the housing
bill by 72-13 votes. The legislation now awaits the signature of
U.S. President George W. Bush, who could sign it into law as early as
this week.