Wall Street dealers showed less interest for cash from Federal Reserve this week, according to Fed data released on Thursday, as easing credit conditions allow greater access to capital, Reuters reports.
Data on two Fed lending programs aimed at primary dealers, or Wall Street firms that deal directly with the Fed, showed less direct borrowing from the Fed and reduced demand to exchange risky securities for the Fed’s holdings of US government debt.
It is too early, however, to determine whether the credit crunch has taken a turn for the better, analysts say.
“On the surface, these numbers offer optimism for the credit market, but looking beneath these numbers, we just don’t know,” says Ward McCarthy, managing director at Stone & McCarthy Research Associates in Princeton, New Jersey.
US primary dealers borrowed an average $24.8 billion a day in the week ended May 7 from the Fed’s discount window, down from the prior week’s $30.18 billion daily pace, the Fed says.
Borrowings from the Fed’s primary dealer credit facility, or PDCF, in the latest week were 35% below the peak set a month ago.
Another sign of easing cash demand from dealers has been their dwindling bids at the Fed’s Term Securities Lending Facility, or TSLF.
On Thursday, Wall Street dealers submitted only $28.77 billion in bids for the $50 billion of Treasuries offered by the Fed, according to the US central bank.