The US government took control of Fannie Mae and Freddie Mac yesterday in what is already known as the world’s largest financial bail-out of all time. “Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe,” Hank Paulson, Treasury secretary, said.

This is a positive step. Shoring up the 2 companies who, at some point, touch 80% of all mortgages stateside allows the Treasury and the US government to take a ‘time-out’ and accurately plan as to where the next round of foundations will be placed.

Overnight stock markets have jumped higher and debt markets have also looked on the deal favourably, the dollar however has not. At one point the GBP/USD pair was up 3c from Friday’s close on dollar profit taking although this has slackened as early morning trading has continued.

———————-

 Please feel free to contact me (jeremy.cook@worldfirst.com) if you have any questions or thoughts regarding these updates or if you are interested in a particular event in the calendar. If you would like to discuss your foreign exchange requirements, please contact our:Corporate Foreign Exchange Team on 020 7801 9050 or our Private Client Currency Exchange Team on 020 7801 9080.   

Disclaimer: The above comments are only our views and should not be construed as advice. You should act using your own information and judgement. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgement as of the date of the briefing and are subject to change without notice.Any rates given are “interbank” i.e. for amounts of £5million and thus are not indicative of rates offered by World First for smaller amounts. E&OE. Definitions of jargon/market terms can be found in our Glossary of Foreign Exchange Terms.