Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!news.media.mit.edu!americast.com!americast.com!usa-post Newsgroups: usa-today.banks,americast.usa-today.banks From: usa-post@AmeriCast.Com Organization: American Cybercasting Approved: usa-post@AmeriCast.com Subject: banks Tue, Sep 8 1992 Date: Tue, 8 Sep 92 04:30:16 EDT Message-ID: 09-08 0000 DECISIONLINE: Banking & Economy USA TODAY Update Sept. 8, 1992 Source: USA TODAY:Gannett National Information Network CONSUMER INTEREST RATES TO DIVE: Consumer interest rates will fall fast this week. Economists "have been thinking rates (would) hit bottom for some time, because we had all expected the economy to pick up by now," says Frank Nothaft of the Federal Home Loan Mortgage Corp. They've been too optimistic. The bond market exploded due to the threat of a weakening economy in which employers still are slashing payrolls. FED FUNDS RATE ALLOWED TO FALL: The yield on the bellwether 30-year Treasury bond fell to a six-year low of 7.29% Friday. To boost the economy, the Federal Reserve allowed the Fed funds rate, the rate at which banks lend to each other, fall from 3.25% to 3%. The move was intended to stimulate borrowing, but analysts said the most immediate effect may be yet another drop in bank deposit rates. OVERALL UNEMPLOYMENT WORSENS: The nation's unemployment rate edged down to 7.6% in August because of a temporary summer jobs program for teens, but adult joblessness worsened slightly and the economy lost thousands of crucial manufacturing jobs. Administration officials tried to put a good face on the unemployment report, but Democrats and economists were dismayed by an 83,000 personnel drop in U.S. payrolls. MORTGAGES DROP BELOW 8%: Thirty-year, fixed-rate mortgages averaged 7.94% this week, according to a national survey released Friday by the Federal Home Loan Mortgage Corp. The decline follows a rise to 8.01% last week and brings the rate back near the 19-year low of 7.87% hit two weeks earlier. On one-year adjustable rate mortgages, lenders were asking an average initial rate of 5.24%, down from 5.26% last week. BUSH SAYS ECONOMY IS RECOVERING: President Bush claimed on television Sunday that the economy is on the road to recovery. But Democratic challenger Bill Clinton, appearing on the "Brokaw Report," said separately that Bush is to blame for the dollar's steady decline. Clinton said the stock market and dollar dropped after Bush unveiled his economic program at the Republican Convention in August. DOLLAR WON'T SEE PULLOUT: Global investors won't begin a widespread attempt to pull out of dollar-dominated investments, even though moves by the German Bundesbank have caused the dollar to tumble, presidential aide Richard Darman said Friday. Darman is the director of the Office of Management and Budget. He said the USA still has the world's leading economy. GERMAN INTEREST RATES KEPT HIGH: The German central bank is weakening the dollar by holding German interest rates high, according to Richard Darman, director of the Office of Management and Budget. While the Bundesbank has held interest rates in Germany high - many rates hover around 9% - the U.S. Federal Reserve System has pushed interest rates lower to help stimulate the economy. Investors dislike the lower rates. FLORIDA TO BAIL OUT BUSINESSES: Florida Gov. Lawton Chiles Friday announced a program that will provide $10 million in interest-free, short-term loans to Dade County small businesses that suffered major damage from Hurricane Andrew. The $10 million fund is an emergency appropriation from the state's working capital fund. Chiles said the Florida Department of Commerce will disperse loans from the fund. MUNI GROUPS TO SET STANDARDS: Two municipal bond forces will set standards for disclosure of information on older munis traded among investors. States and localities that had issued the bonds will provide the information in standardized formats established by the Government Finance Officers Association and the National Federation of Municipal Analysts. JAPAN MAY DABBLE IN HOUSING: Major Japanese banks, including Mitsubishi Bank and Industrial Bank of Japan, are considering a plan to help housing loan institutions by buying non-performing loans from the institutions and reselling them to an entity created for that purpose. The banks would then write off the loans, Bloomberg Business News reports. T-BONDS, T-BILLS FALL: Financial markets were closed Monday for Labor Day. Friday, the Dow Jones industrial average fell 10.27 points to 3281.93, leaving it 14.32 points higher for the week. The NASDAQ composite index lost 1.44 points to 573.44. Yields on 30-year Treasury bonds fell to 7.28% from 7.36%. The discount rate on three-month Treasury bills fell to 2.91% from 3.12%. DOW JONES OPENS ON DOWNSWING: The Dow Jones average of 30 industrials opens at 3281.93 Tuesday after closing down 10.27 Friday. Markets were closed Labor Day. The New York Stock Exchange composite opens at 229.75, down 0.37. The American Stock Exchange market value opens at 384.85, down 0.25. The NASDAQ OTC composite opens at 573.44, down 1.44. 24-HOUR TELEPHONE INFORMATION: USA TODAY Money Hot Line. 95 cents a minute. 1-900-555-5555. Banking & Economy Editor: Beth Mann. (1-919-855-3491) Making copies of USA TODAY Update (Copyright, 1992) for further distribution purposes violates federal law. This article is copyright 1992 Gannett News Service. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM