According to a new Bloomberg survey, the world wide CreditCrunch™ appears to be slowly fading away.

You might be wondering what the heck is this CreditCrunch? There has been a lot written on the subject, but not too much explained at a basic level. So here goes…..

The current issues with credit is that it has become more expensive. What does that mean? Well, essentially it means that the funding of lower credit investments have become more expensive. Why? Because people were afraid of risk and wanted only the safest investments. Treasury Bills (T-Bills).  Read more

Normally I’m not a big fan of needles. However, when the prescription is from the Bank of Canada, I’ll make an exception. Today the bank of Canada will be adding about $2 billion in short term Treasury Bills into the market. Sounds boring, eh? Well its not.

Ever since the beginning of the Credit Crunch™ people have been scarred and moved their short term investments from Commercial Paper & Banker Acceptance to Treasury Bills. As the Canadian Govt is still running surpluses, supply has been tight and rates tumbled as the price rose (classic supply/demand). The 1 month T-Bill has been as low 1.2% institutionally a few weeks ago. This morning with the new injection, we’re back in the 2.90% range. Just a quick note that although many sources will be quoting that 1 month Bill at 2.90%, as a retail investor, expect a much lower quote. I’ll save that explanation for another day…. unless you ask my in the forum.