Daily FNArena News - FYI

What happens if foreign sovereign investors abandon Fannie and Freddie?

Weekly musings by your editor. Don’t think all that is happening in the US financial sector was impossible to predict. Don’t think it will all be over anytime soon either. And don’t be surprised if the next big event won’t be in the US at all.

Standard Chartered suggests the US dollar has been oversold on financial sector concerns and with the US ahead of other regions in terms of policy initiatives the currency may soon strengthen.

ANZ Bank suggests the Aussie dollar will move beyond parity against the US dollar in coming months but doesn’t see the strength as last much into 2009.

The market sees the British Pound at much lower levels against the US dollar in the year ahead and SVB’s Joe O’Leary couldn’t agree more.

According to Macquarie central banks are likely to lift interest rates modestly to control inflation but such a move would likely further pressure equity markets.

As the US government steps in to save its two sponsored mortgage lenders, one may wonder just exactly what Fannie Mae and Freddie Mac are and why they are so important.

While the US Federal Reserve is becoming increasingly concerned about the inflation outlook the Commonwealth Bank suggests the US Housing market needs to stabilise before a rate hike is considered.

US thrift IndyMac collapsed on Friday as the market focused on Freddie and Fannie. It was the second biggest bank collapse in US history.

Credit insurance group Atradius has surveyed businesses globally and come away with the conclusion the global credit crisis still has further to run.