Fed auction reveals relative interbank calm

Money market tensions in the United States showed further signs of abating on Tuesday as the Federal Reserve published the results of its latest Term Auction Facility operation.

The results of the operation conducted on Monday, which added $30 billion in 28 day loans, revealed a drop in demand for and the cost of central bank money.

The operation was oversubscribed with a bid-to-cover ratio of 1.25%, down from the auction conducted a fortnight ago, which was oversubscribed almost twice over.