JANUARY 22, 2010
By Dwight Brown, CFC Derivatives Supervisor
The yield differential between the two-year U.S. Treasury Note and the 30-year U.S. Treasury Bond reached a 30-year record high of 3.8 percent in early January. The slope of the yield curve, which consists of Treasury yields from two to 30 years, is widely regarded by economists as an accurate predictor of the direction of the economy.
Tags: U.S. capital markets, yield curve
JANUARY 22, 2010
December’s retail sales figures were disappointing, as sales unexpectedly fell 0.3 percent on broad-based weakness, suggesting holiday spending was not as strong as earlier reported.
December’s drop in sales capped off a disappointing 2009, which posted a 6.2-percent decrease for the year, the largest decline since comparable records began in 1993. Excluding autos, sales fell 0.2 percent compared to November’s revised 1.9-percent gain.
JANUARY 22, 2010
Power plant construction costs declined only marginally in Q3 2009 despite continued weakness in new plant construction orders, according to consulting company IHS Cambridge Energy Research Associates (IHS CERA).
The company’s North America Power Capital Costs Index (PCCI) for Q3 was virtually unchanged from Q2, and just 1.8 percent lower than Q1. Compared with 2008, the index was down 4.9 percent.
Tags: CERA, power generation
JANUARY 22, 2010
In a briefing to reporters last week, U.S. Department of Energy (DOE) Secretary Steven Chu said that $18.5 billion in federal loan guarantees for four new nuclear power plants will be approved soon.
DOE had expected to start approving the loans in December but the process was “more complicated than I thought,” Chu said, according to a report from Bloomberg. “These are multibillion dollar loans that involve a lot of stakeholders.”
Tags: DOE, nuclear power
JANUARY 22, 2010
Two environmental groups critical of coal-fired electric plants are urging the U.S. Securities and Exchange Commission (SEC) to encourage broker-dealers that underwrite municipal bonds for such projects—especially those of municipal utilities and rural electric cooperatives—to provide more disclosure about the regulatory and fiscal changes stemming from climate change, according to The Bond Buyer newspaper.
Tags: climate change, SEC
JANUARY 15, 2010
By Madhuri Dhawan, CFC Financial Analyst
Minutes from the most recent Federal Open Market Committee (FOMC) meeting in December were more dovish than expected, signaling a greater likelihood of keeping short-term interest rates low for an extended period of time.
While acknowledging recent signs of economic improvement, the FOMC is only cautiously optimistic regarding the outlook for continued increases in economic activity. In addition, the Federal Reserve maintained its outlook of low inflation for the near future. Although the degree of deterioration in the labor markets has slowed in recent months, the FOMC expects the unemployment rate to remain high for “some time.”
Tags: CFC, Cooperative Finance Corporation, U.S. capital markets, U.S. economy
JANUARY 15, 2010
The recent string of promising news reports on the labor market ended in December as payrolls declined by 85,000. The economy shed 4.2 million net jobs in 2009 and has shed 7.2 million since the start of the recession.
Job cuts have slowed in recent months, with November’s revised payroll figures showing a net gain of 4,000 jobs—the first increase since December 2007. October’s figures, however, were revised lower by 16,000. Employers are still reluctant to increase hiring as they gauge the strength of the economic recovery and continue to deal with tight credit conditions.
Tags: CFC, Cooperative Finance Corporation, U.S. capital markets, U.S. economy
JANUARY 15, 2010
Last week, the Rural Utilities Service (RUS) issued guidance to its borrowers and staff on accounting for the receipt of government grants. This guidance does not supersede any existing regulations such as those pertaining to storm damage and the Rural Economic Development Loan and Grant Program.
Tags: CFC, Cooperative Finance Corporation, Electric Cooperatives, Rural Utilities Service, RUS
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JANUARY 15, 2010
On Tuesday afternoon a 7-magnitude earthquake devastated the island of Haiti. Most of Haiti’s capital, Port-au-Prince, has been destroyed and millions of people have lost their homes, workplaces and family members. Many of Haiti’s cooperatives have been severely damaged and many of those they serve are in severe need.
Tags: CFC, Cooperative Development Fund, Haiti earthquake relief
JANUARY 15, 2010
The chairman of the U.S. Senate Energy and Natural Resources Committee said last week that Congress is unlikely to pass a cap-and-trade bill aimed at reducing greenhouse gas emissions (GHGs) in 2010.