| Headline: Expected default rates soar in US Source: Euromoney Date: May 2001 Author: Antony Currie KMV designed its expected default rate charts as a way to make first banks, and now investors, better able to monitor credit risk and trade bonds. Now its data might be the harbinger of doom for the US, which has spent most of the year hoping that a series of interest rate cuts will be enough to salve its ills and stave off recession. The Federal Reserve finally gave the US what it wanted. Another rate cut, and one which came outside of the normal Federal Open Market Committee meetings that take place roughly every seven weeks. Stocks soared immediately the announcement was made at 11am on Wednesday April 18, with the Dow closing up 399 points and Nasdaq up 156. But within a week of April’s surprise cut, all Nasdaq’s gains had evaporated and much of the Dow’s had gone too. Meanwhile it’s still a matter of raging debate among economists whether the US is indeed entering a recession. Signals are mixed. Growth has never slowed as much as it has in the past 12 months without the economy going into recession. |