Money Market Report for the week ended June 3, 2011

ECB Monetary Operations

On Monday, May 30, the ECB announced its weekly Main Refinancing Operation (MRO).  The auction was conducted on Tuesday, May 31, and attracted bids from euro area eligible counterparties of €110.76 billion, €5.34 billion lower than the amount bid for in the previous week. The bid amount was allotted in full at a fixed rate equivalent to the prevailing main refinancing rate of 1.25%, in accordance with current ECB policy.

On Tuesday, May 31, the ECB conducted an auction for a seven-day fixed-term deposit intended to absorb €75 billion. This operation is designed to sterilise the effect of purchases made under the Securities Markets Programme that were settled but had not yet matured by the previous Friday, May 27.  The auction was carried out at a variable rate, with euro area eligible counterparties allowed to place up to two bids at a maximum rate of 1.25%. It attracted bids amounting to €103.53 billion, with the ECB allotting €75 billion or 72.44% of the total amount bid for. The marginal rate on the auction was set at 0.89%, with the weighted average rate at 0.81%.

On Wednesday, June 1, the ECB conducted a seven-day US dollar funding operation through collateralised lending in conjunction with the US Federal Reserve.  This operation was carried out at a fixed rate of 1.10% and once more, no bids were placed by euro area eligible counterparties.

Domestic Treasury Bill Market

In the domestic primary market for Treasury bills, the Treasury invited tenders for 91-day bills maturing on September 2, 2011. Bids of €14.08 million were submitted for the 91-day bills, with the Treasury accepting only €4.00 million. Since €7.88 million worth of bills matured during the week, the outstanding balance of Treasury bills decreased by €3.88 million, to stand at €349.71 million.

The yield from the 91-day bill auction was 1.230%, i.e. 2 basis points lower than on bills with a similar tenor issued on May 27, 2011, representing a bid price of 99.6900 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 182-day bills, maturing on September 9, and December 9, 2011, respectively.