Since Lehman Failed

October 3, 2008

Market participants left work three weeks ago on September 12th expecting the Treasury to arrange a buyer for Lehman or to step in at the last minute and nationalize it.  The allowed failure of Lehman was a mistake, which will exact a huge bill on taxpayers and already has hurt asset holders. Here are some net changes for those three weeks.  Gold prices are 9.5% higher, while oil has dropped 7.5%.  Ten-year Treasury yields are 11 basis points lower, and the Dow Jones Industrial Average is down 9.6%.  The dollar rose 3.1% against the euro but fell 2.5% against the yen.  The buck advanced against commodity currencies like the Aussie dollar (6.3%), Canadian dollar (1.8%) and kiwi (0.9%).  It rose 1.0% against sterling but edged 0.2% lower against the Swiss franc.  The greatest strain can be found in short-term Libor rates, which show net gains of 151 basis points for dollars, 68 bps for C-dollars, 57 bps for sterling, 48 bps for Australian dollars, 38 bps for euro, 32 bsp for Swiss francs and 14 bps for yen.



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