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U.S. Bailout Passes

Congress Congress has passed the $700 billion U.S. rescue package, just four days after voting down the original version. 

Now all eyes have turned to the market’s reaction.  Will this free up North America’s lock-tight credit markets?  Who knows.  It may take a while for the U.S. treasury to buy up all the rotten assets plaguing American banks.  In the short-term, it’s possible that lenders may still be unwilling to loosen up credit to any great extent.

On one positive note, CEP says LIBOR (the international overnight bank-to-bank lending rate) has improved dramatically.

Here is the rest of the market’s reaction following this historic vote:

  • TSX: +1.19%
  • Dow Jones Industrials: +0.45%
  • 5-year Canadian bond yield:  -0.07% to 2.96%