Overnight Funding Costs Recede as Markets Open After Frankenstorm Sandy

“NEW YORK (Reuters) – Wall Street firms and U.S. banks scrambled to raise cash on Wednesday, as U.S. financial markets resumed normal trading after a devastating storm pummeled the U.S. East Coast and closed major markets for two days.

Major banks and investment houses rely on the money markets – a key cash source for financial markets – to finance trading positions and loans that they make. Companies sell commercial paper and other short-term loans to money market funds and other investors fund their inventories and payrolls.

The massive storm, Sandy, disrupted these markets, thinned trading and drove up borrowing costs on Monday and Tuesday.

But overnight borrowing costs in funding markets have since receded from those levels, which were last seen during the height of the global credit crunch in late 2008.”