Credit dries up as banks price in fear
THE second wave of the US sub-prime crisis yesterday caused a logjam in Australia’s very short-term money market, as seasonal demand for cash out of the US and the liquidity squeeze triggered a surge in Australian rates.
The yield for the 30-day bank bill rate jumped 17 basis points to an 11-year high of 7.37 per cent yesterday — more than 60 points over the official one-day cash rate of 6.75 per cent — causing analysts to point to seasonal demand in the US banking market.
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