Money Market Report for the week ending 19 June
ECB Decisions
In view of the improvements in US dollar funding conditions and the low demand at recent seven-day maturity US dollar liquidity-providing operations, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank, in consultation with the Federal Reserve, have jointly decided to reduce the frequency of their seven-day operations from daily to three times per week. This operational change will be effective as of 1 July. At the same time, these central banks will continue to hold weekly operations with an 84-day maturity.
These central banks stand ready to re-adjust the provision of US dollar liquidity as warranted by market conditions. The swap lines among these central banks are available standing facilities and serve as an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses, both domestically and abroad.
ECB Monetary Operations
On 15 June, the ECB announced a sevenday Main Refinancing Operation. The operation was conducted on 16 June and attracted bids from euro area eligible counterparties of €0.47bn, €0.03bn more than the bid amount of the previous week. The amount was allotted in full at a fixed rate equivalent to the prevailing MRO rate of 0.00%, in accordance with current ECB policy.
On 17 June, the ECB conducted an 84-day US dollar funding operation through collateralised lending in conjunction with the US Federal Reserve. This operation attracted bids of $3.19bn, which was allotted in full at a fixed rate of 0.34%.
During the week under review, the ECB conducted five seven-day US dollar funding operations through collateralised lending in conjunction with the US Federal Reserve. These operations attracted total bids of $0.04bn, at the rates of 0.34% and 0.35%.
On 18 June, the ECB also conducted the fourth operation of the Targeted Longer Term Refinancing Operations programme. This operation attracted bids of €1,308.43bn, with the rate fixed at the average rate of the MROs over the life of the operation. However, the final interest rate applied to this operation may differ and will be determined according to the TLTRO-III Decision.
Domestic Treasury Bill Market
In the domestic primary market for Treasury bills, the Treasury invited tenders for 91day and 182-day bills for settlement value 18 June, maturing on 17 September and 17 December, respectively. Bids of €140m were submitted for the 91-day bills, with the Treasury accepting €32.50m, while bids of €117m were submitted for the 182-day bills, with the Treasury accepting €10.50m. Since €43m worth of bills matured during the week, the outstanding balance of Treasury bills remained unchanged at €835m.
The yield from the 91-day bill auction was - 0.386%, a decrease of 3.8 basis points from bids with a similar tenor issued on 11 June, representing a bid price of €100.0977 per €100 nominal. The yield from the 182-day bill auction was -0.355%, a decrease of 4.5 basis points from bids with a similar tenor issued also on 11 June, representing a bid price of €100.1798 per €100 nominal.
During the week under review, there was no trading on the Malta Stock Exchange.
On Tuesday, the Treasury invited tenders for 91-day bills and 364-day bills maturing on 24 September and 24 June 2021, respectively.