A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

- A -

• ABCP - Asset Backed Commercial Paper is a short term funding mechanism (typical maturity of 90-180 days) often used by banks or financial institutions consisting of securities backed by balance sheet items or other financial assets.
• ABS - Asset Backed Security is a debt instrument comprised of pooled assets or collateralized by cash flows or receivable from a specific pool of assets. Individually the assets could be considered minor investments, but collectively the pooled assets are more worthwhile and also offer risk reduction via diversification. The securitization of such assets allows them to be used by a broader client base. Common types of cash flows or receivables include those from credit card or auto or mortgage loans and to a lesser extent from leases, royalty payments or revenue streams.
• ABX - Index on asset backed securities.
• ACH - Automated Clearing House cash transfer. It has the advantage of being reversible, as compared with the wire system, which is used in final settlement of bank obligations for immediately available money.
• Agencies - Any of a number of U.S. government agencies that offer debt securities and are considered the safest investment next to U.S. Treasuries. The major agencies are:
  • FHLB - Federal Home Loan Banks created in the 1930's (12 regional ones in cities such as Chicago and Indianapolis) supervised by the FHLBB (the Federal Home Loan Bank Board) and financed by the Office of Financing of the FHLBB which issues their consolidated bonds. Oversight by Federal Reserve Housing Finance Board which allows them to do whatever they want...until they get flak. Hence the fact that the Banks are all involved in derivatives issuance that essentially passes on their AAA credit rating to corporations and puts the banks in the seat of middleman. This is the source of problems with the Treasury's officials, who think the Banks' profits should accrue to the government or to funding housing.
  • Ginnie Mae - Government National Mortgage Association, a department in HUD that issues only pass-through mortgage securities issued with FHA and VA guaranteed loans as collateral.
  • Fannie Mae - Was broken off from Ginnie in the 60's. Fannie is a private corp "in the public interest" that buys middle class mortgages from banks, gets a fee for packaging them into pass-throughs called MBS (mortgage-backed securities), and either holds them or auctions the mortgages. Fannie does issue its own debt to raise capital for holding the MBS.
  • Freddie Mac - The 'other' mortgage corporation created in 1973 as an alternative to Fannie. Does many of the same operations, except their pass-throughs are called PC's (participation certificates) and they pioneer new concepts such as CMO's (collateralized mortgage obligations, which split off the cash flows from unpredictable mortgages into predictable pay-off tranches).
  • Other - The primary ones being Sallie Mae (student loans) and FFCB (Farm Credit, which has approximately 31 components in a structure that would take up pages). All do the same things, which is issue bonds and use the proceeds to fund the processing and/or holding of a portfolio of illiquid loans for housing and farms into certificates that can be marketed to banks and other institutions. The idea is that this standardizes credit quality and makes these loans saleable in the event banks need to sell. That makes credit more available in the targeted sectors. All have varying degrees of Federal subsidy — tax abatements, freedom from SEC registration and oversight, etc. — that puts the Congress and Treasury into the oversight business. Since Treasury is issuing less debt, these securities are seen as close substitutes and that's why market sources are very interested in their ops.
• AGP - Asset Guarantee Program established by the US Treasury Department to cover $5 billion being given to Citigroup to guarantee part of possible losses on its portfolio of more than $300 billion mortgages. Treasury says it does not anticipate the program will be made widely available but other financial institutions could be eligible in the future.
• Alt-A - Alternative A-paper is a classification of a U.S. mortgage that is between prime and sub-prime.
• AMLF - The Federal Reserve announced on September 29, 2008 an Asset-backed Commercial Paper Money Market Mutual Fund Liquidity Facility to extend non-recourse loans at the primary credit rate to the US depository institutions and bank holding companies to finance purchases of high-quality asset-backed commercial paper from money market mutual funds. Also planned to purchase from primary dealers federal agency discount notes (short-term debt obligations issued by Fannie Mae, Freddie Mac and FHLB).
• ARS - Auction Rate Security is a longer term corporate or municipal bond whose interest rate is regularly reset via a dutch auction.
• ATM - At The Money is a point at which the option strike price or exercise price is the same as the underlying security.

- B -

• Back end - U.S. Treasury securities in the 15 to 30 year maturity range. (also see Front end and Intermediates)
• Barbell - A strategy that buys 2- and 10-year Treasury notes, and shorts a duration weighted equivalent of 5 year notes.
• Basis points - 1/100th of 8, or the portion of yield that is the second place past the decimal point, i.e. the 3 in 4.03% = 3 basis points.
• Bears - Bears like a down market. (also see Bulls and Pigs)
• Beta - The rate of sensitivity on single name or portfolio to returns on the market as a whole. A number greater than 1.0 is high to moderate.
• Bidside - Same as bid, as in bid/offer. Every market has two sides, where the dealer will buy (bid) and sell to customer (offer). In a typical bond price quote this is expressed as a percentage of par and a number of 32nds, for example 82.05-82.08. In this case, the dealer will buy at $82.16 per $100 of face value and sell at $82.25 per $100. It makes sense that the offer (selling) price is a tad higher since the dealer is attempting to make a profit for the service of holding the security and adding liquidity to the market.
• Bill - Among U.S. Treasuries, any security with a maturity of 1 year or less at original issue. These are sold at a discount. (also see Bond and Note)
• Bollinger band - 5% (most usually) price bands (straight lines on either side of a pattern) drawn around the trading "trend" for a security (as determined by a straight line regression).
• Bond - Generically, any fixed income security that consists of an IOU to be paid at a future date and some form of interest. Among U.S. Treasury issued securities this refers to maturities of over 10-years at original issue, but other agencies may call shorter term issues a bond.
• Bond, The - The most recently issued, longest term U.S. Treasury (i.e., the 30-year U.S. Treasury bond).
• Bulls - Bulls like an up-market. (also see Bears and Pigs)
• Buyside - Institutional customer accounts, such as insurance companies, mutual funds, hedge funds, and bank portfolios. Opposite would be sellside, meaning the dealer community or professional traders.

- C -

• CDO - Collateralized Debt Obligation is a debt instrument comprised of pooled assets, collateralized by either cash flows or receivables from an asset pool alongside other structured credit product form a book of fixed-income assets. These instruments are then subdivided into tranches including senior tranches (rated AAA), mezzanine tranches (AA to BB), and equity tranches (unrated). In the event of loss, a reverse recovery is applied thus junior tranches offer higher coupons.
• CHIPS - Clearing House Inter-bank Payments System, used by U.S. banks to settle transactions by netting checks; the bank in deficit wires transfer funds to the bank it owes.
• CMBS - Commercial Mortgage Backed Securities are similar to MBS but loans are collateralized by commerce-related real estate including multi-family residences, retail and office space, warehouses, industrial parks to name a few.
• CMBX - Commercial Mortgage Backed Security Index is a group of indexes comprised of 25 tranches commercial mortgage-backed securities (CMBS). Each tranche has a different credit rating.
• Collateral - Generally fixed income securities used in a repurchase transaction.
• Convexity - A bond's price and yield move inversely. The change in price is used to estimate the change in yield based on the change in duration (roughly, duration is the present time value of the bond's payments, expressed in a number of years), but does not always give an exact estimate. That is because the yield moves along a curve whereas the price moves are linear (try drawing a line and putting a C-shaped curve on its side and tangent to it and you'll get the illustration). The "error"/difference is called "convexity." Convexity is of particular interest to mortgage traders because their payment stream is constantly being reestimated, based on the fact that collateral changes — some homeowners sell and "prepay" or pay off their loans. Mortgages therefore have negative convexity, namely their yields are losing more than is predicted. In order to make up the lost yield in a portfolio, traders are forced to take the proceeds of the prepayments and put them into Treasury securities which cannot be called. That's called a "convexity trade." Suppose Fannie Mae and Ginnie Mae mortgage agencies both reported slower prepayments than expected. Traders then have to adjust yield estimates higher for existing MBS portfolios, and accordingly sell Treasurys as a result.
• Conservatorship - Generally, the establishment of an entity by court order. But, for regulated business enterprises, the establishment is statutory or regulatory in nature and property of the entity then becomes subject to legal control of another entity, otherwise known as a conservator. ie Freddie Mac or Fannie Mae is a conservatorship of the US government.
• CPFF - Commercial Paper Funding Facility announced on October 7, 2008 to provide liquidity to term funding markets.
• CPP - Capital Purchase Program is a key component of the $700 billion TARP, providing capital to healthy institutions to increase the flow of credit to businesses and consumer by purchasing up to $250 billion of senior preferred shares on standard terms of any qualified bank and savings association.
• Credit Default Swap - A derivative contract whereby the buyer of protection makes periodic payments to the seller. The buyer is protecting against default and in the event of default, the seller pays off the buyer.
• Current account - The monthly trade balance plus change in interest on investments (up when foreigners own more here from all the trade gaps) plus Unilaterals (i.e., transfers of ownership from gifts and government aid) must equal the capital markets sources of fund which are equal to direct investment plus securities holdings (U.S. Treasuries plus private stocks and bonds) plus official reserves.
• CUSIP - Committee on Uniform Securities Identification Procedures; assigns identifying nine-digit registration numbers to Treasury and Agency securities, as well as corporates and other private securities.

- D -

• Delta - The ratio of the change in price of an option to the change in price of the underlying asset. Also known as a hedge ratio.
• DEQ - Delivered Ex Quay is An Incoterm, means the same as DES, but transfer of risk does not occur until the goods have been unloaded at their intended destination.
• Derivatives - A financial futures, forward, swap or options contracts whereby under the terms of the contracts, the buyers and sellers agree to make payments between them based upon the value of an underlying asset or other data at a specified point in time.
• Directional - As in "the Treasury yield curve remains directional", e.g. the market is behaving as expected. Given price yield relationship with respect to maturity, the above statement implies the yield curve will steepen amid rallies and flatten at lower prices. Short dated paper will outperform the back end as the market trades up. Or generally speaking within the context of trade flow. If someone says, "the bulk of trade flows were directional," that means the selling was done because the general view is for higher rates down the road and vice versa for buying ... action did not take place for a technical reason. In other words the market is behaving in a natural, logical way given influences/drivers/focus of the market. Important distinction because the market trades up or down on many variables, directional flows are just one of them.

- E -

• ECB - European Central Bank created in January 1999 to be the overlord on the new European Union.
• EESA - Emergency Economic Stabilization Act passed by Congress Oct 3, 2008, the umbrella legislation authorizing the TARP.
• Euro - Begun in January 1999. A new, pooled European currency regulated by the ECB, weighted to represent member countries' participation.
• Eurodollar Futures - Exchange traded contracts based on three-month US dollar LIBOR rates, which have durations from 1-month up to 10 years.

- F -

• Fannie Mae - Was broken off from Ginnie Mae in the 1960's. Fannie was a private corporation "in the public interest" that bought middle class mortgages from banks, and got a fee for packaging them into pass-throughs called MBS (mortgage-backed securities), and either held them or auctioned the mortgages. Fannie does issue its own debt to raise capital for holding the MBS. The agency was placed in government conservatorship in September 2008.
• Fed repos - Fed does repos (temporary buying of securities; anything that adds to the central bank's balance sheet by definition adds reserves — when they pay dealers the central bank is creating money) and matched sales (a fancy way of saying reverse-repos which are temporary sales that drain reserves). The Federal Reserve reports the volumes (dollars) dealers submitted and that Fed accepted for these transactions by class of asset — critical info to the dealers who are trying to gauge demand/supply in the various markets. Also Fed reports stop-out rates, which is the level that market costs will move to. Most economists do bids as percent of submitted and chart this by asset class over time and they are interested in the Fed's stops because once Fed funds (the reserves banks trade amongst themselves) move to that level, the whole market adjusts.
• FIDO - Fidelity Mutual Funds.
• .618 Fibonacci retracement - Fibonacci ratios are mathematical proportions that occur in nature and are thought to give resistance and support points (also 38.2% and others); note placement of the decimal.
• Flippers - Quick turn-over traders.
• Forward Price - A future delivery price.
• Forward Price Agreement - An over-the-counter forward contract whereby there is a payer of a fixed interest rate, in turn receives the floating rate, which is equal to a reference rate typically LIBOR or Euribor). Payments are tabulated for the notional amount for a certain period, then netted, so only the difference is actually paid on the termination date.
• Forwards - Off-exchange contracts for future delivery. Most common in the foreign exchange sector.
• FRBNY - Federal Reserve Bank of New York, one of the 12 Federal Reserve regional banks. It has pride of place in the Fed system because it conducts securities operations on behalf of the Fed due to its proximity to Wall Street.
• Freddie Mac - The "other" mortgage corporation created in 1973 as an alternative to Fannie Mae. Does many of the same operations, except their pass-throughs are called PC's (participation certificates) and they pioneered new concepts such as CMO's (collaterilized mortgage obligations).
• Front end - U.S. Treasury securities of under 5 years maturity. (also see Intermediates and Back end)

- G -

• Gamma - The sensitivity of an option's delta to changes in the price of the underlying asset. Gamma is highest when the option is nearing at-the-money status and lowest when the option is deeply out-of-the-money.
• GC - General Collateral, i.e. Treasury securities in good supply that can be borrowed at the most common (general) repo rate, a cost that is a bit under the Fed funds overnight rate.
• Ginnie Mae - Government National Mortgage Association, a department in HUD that issues only pass-through mortgage securities issued with FHA and VA guaranteed loans as collateral.
• Give - Amount of yield give-up to move into a new bond of similar maturity, used to refer to rolling into Treasury securities that are sold on a regular schedule such as weekly or monthly or quarterly; so the roll yield indicates the amount "given up" to move out one month in the case of a 2-year security (sold monthly), or one week in the case of a 3- or 6-month bill (sold weekly).

- H -

• Hedge funds - Unregulated pooled money accounts that take market bets based on past spread relationships; the minimum investment in hedge funds ranges from $25,000 on up and may be in the millions.
• HELOC - Home Equity Line of Credit is a loan against all or a portion of a homeowners' non-mortgage ownership of their home.

- I -

• Intermediates - 5 to 10 year range in U.S. Treasuries or futures contracts. (also see Back end and Front end)
• Implied volatility - In options, market participants use the famous Black-Scholes pricing formula to estimate trading parameters, which include time to maturity, price, a risk free interest rate, and volatility; since all but volatility are observable the convention has been to use the other inputs to estimate "implied" volatility and to discuss whether the market is pushing volatilities higher or lower.
• Intermediates - 5- to 10-year notes in cash (U.S. Treasuries) or futures contracts.
• Investment Rate - This rate is comparable in short-term issues (those that carry no coupon) to the coupon rate on longer-term notes and bonds. Its importance is in determining the cost of financing and is mostly watched for cash management bills.

- J -

- K -

- L -

• Limit (up or down) - The maximum price amount that a futures exchange will allow a contract to trade in a day's session.
• Lock - Both bid and offer are at same price.

- M -

• M3H - M-3 money supply, harmonized for the EU, i.e. GDP-weighted for member countries.
• Margin call - Stock and futures investors who have borrowed funds to invest (margin) are subject to calls if the value of their investment falls; margin requirements are a percent of face value and are set by the Federal Reserve (stocks) or the clearing house for the exchange (futures).
• MMIFF - Money Market Investor Funding Facility announced on October 21, 2008 by the Federal Reserve to support a private-sector initiative designed to provide liquidity to US money market investors. The Federal Reserve Bank of New York will "provide senior secured funding to a series of special purpose vehicles to facilitate an industry-supported private-sector initiative to finance the purchase of eligible assets from eligible investors."

- N -

• NAIRU - Non-Accelerating Inflation Rate of Unemployment, important in determining if employment growth may cause wage pressures and ignite inflation.
• Note - Among U.S. Treasury securities, any maturity over 1 year and up to and including 10 years at original issue. These are sold at par and have a fixed schedule of coupon payments. Other issuers of debt may define the term to suit their needs. However, all are technically bonds. (also see Bond and Bill)
• Notional - The face amount of bonds, typically in $1,000 denominations, though basic trading amounts are higher, e.g. $1 million in U.S. Treasury notes.

- O -

• On the bogey - Individual benchmark of portfolio duration set at 800 with index figure (i.e., 107) indicating higher or lower than desirable level.
• On-the-run/off-the-run - On-the-run issues are the most recently auctioned U.S. Treasury securities; all other U.S. Treasuries are off-the-run; can be off once (immediate prior auction also known as "old" issue), off-off (also known as old-old), etc.
• Open outcry - The combination system of hand and voice bids and offers in the Chicago exchanges' trading pits.
• Open Market Operations - The Federal Reserve does repos (the temporary buying of securities; anything that adds to the central bank's balance sheet by definition adds reserves (when they pay dealers the central bank is creating money) and Matched sales (a fancy way of saying reverse-repos which are temporary sales that drain reserves). The Fed reports the volumes (in U.S. dollars) that dealers submitted and that the Fed accepted for these transactions by class of asset (Treasury, mortgage, and agency paper) — critical information to the dealers who are trying to gauge demand/supply in the various markets. Also, the Fed reports stop-out rates, which are the level that funding costs will move to. Most economists analyze this data using a ratio of bids as a percentage of the amounts submitted and chart this ratio by asset class over time. They also are interested in the Fed's stop rates because once Fed funds adjust, the move to this level of funding cost becomes system-wide.
• Options strips - FRBNY conducts special sales of options on repo contracts as part of SLF, to help the financial system cope with the century date change; the three strips each run for seven days and encompass the period around year-end.
• Out-of-the-money calls - An options term that means the underlying security has not risen to the point where the option may be exercised; thus an out-of-the-money call is not worth as much as an "at-the-money" or an "in-the-money"; there are also degrees of moneyness, such as "deep-in-the-money," "near-the-money," etc.

- P -

• Pick - The opposite of "give": the amount of yield (expressed in basis points or fractions thereof) an investor gets above the current yield for extending maturities.
• Pigs - Pigs are those who get too piggy on either side and hold a position too long. (also see Bears and Bulls)
• Pre-positioning - Taking a long or short position in bonds ahead of economic data releases in order to bet on the market's reaction.
• PDCF - Primary Dealer Credit Facility announced by the Federal Reserve on March 16, 2008 and which authorized at Federal Reserve Bank of New York to provide financing to participants in securitization markets, starting March 17 and available for at least six months with the possibility of extension should conditions warrant it.

- Q -

• Quantitative easing - A somewhat nebulous term, but refers to a central bank basing monetary policy on the quantity rather than the price of money. Typically used when a central bank runs out of room to cut its overnight call money rate target to stimulate the economy, quantitative easing results in an expansion of the central bank's balance sheet, the supply of bank reserves and in turn the monetary base. As practiced by the Bank of Japan, it focuses on the liability side of the balance sheet — an expansion of reserves designed to bring down medium and long-term rates generally. As practiced by the Federal Reserve, it focuses on the asset side of the balance sheet — buying specified kinds of assets in order to improve credit spreads in those markets. Expanded bank reserves is a by-product of the strategy.

- R -

• Rate lock activity - On corporate bonds, when a company treasurer wishes to "lock in" a yield level, he contracts with the firm's debt underwriter for a rate. The underwriter then sells futures against the new debt. The underwriter must buy back the futures to cover his position at the time the corporate debt is issued, lifting the lock.
• Real money - Long-term investors (portfolios and retail investors).
• Repo's - Repurchase agreements, a means of financing securities whereby they are temporarily sold to a customer with the agreement that the securities dealer will buy back the same issue, at a higher agreed price that represents a day's interest. Repos can be for longer than one day (term repo); in such case the interest rate can be variable or fixed and there may be a market-to-market provision (haircut) that allows the dealer to price the security according to market conditions; collateral underlying the repo (the security) can be held at the buyer firm, at a custodian bank (third party collateral) or at the seller firm, conditions that are specified in a legal contract called a renewable repo agreement.
• Resistance, target - A technical price level that serves as upside potential for a particular financial instrument; determined based on prior price patterns where investors typically sold.

- S -

• Short trades - Selling a security; you may short an issue that you don't own (go naked) or that you do own (short against the box).
• SLF - The Federal Reserve's Special Liquidity Facility instituted for the century date change.
• Snug - Tighter, usually used in reference to Federal Reserve interest rate policy moving towards a more restrictive stance.
• Social Security - Forget all the rhetoric; it is just another tax, and a very regressive one at that (7.4% on the first $70k of earnings, i.e., a flat tax without regard to your circumstances). And its 'payout' does not depend on contributions (except marginally) but rather on how long you live and what age you retire at ... which is called an 'entitlement'. That's why economics texts call the system a "transfer." Social Security was put in place in the 1930's under different demographics; one real need is to recognize changes in population trends and make program react accordingly — which would result in the exceedingly unpopular move of raising the standard retirement age.
• Soggy - A downward trend, although not necessarily all at once, as in "currencies are soggy."
• Special - Not all repos are traded at the same rate; collateral may be in short supply, resulting in lower rates to borrow called "specials" that are substantially under the general collateral rate.
• Special lending program - The FRBNY lends securities that are in scarce supply in the repo market in an auction program during trading days at 11 a.m. ET; the auctions produce average spread rates that must be subtracted from the GC rate to tell the rate paid to the Fed; the results are announced each afternoon.
• Spreads - In cash, the difference between two yields (2/30-y for example = 4.985% (30-year bond) less the 4.388% (2-year note) = 59.3 basis points. In futures, the time difference between a similar contract traded for delivery in differing months (e.g., December 1998 bond price to March 1999 price).
• Sterilized intervention - Refers to whether a central bank's foreign exchange market intervention (say buying dollars for selling yen) will be permitted to affect the level of reserves in that country's domestic banking system; sterilization implies there will be no effect on domestic interest rates; sterilization involves selling an offsetting amount of assets against the currency acquired, for no net balance sheet effect, or involves drawing the currency from a willing third party central bank (e.g., the Federal Reserve) in a "swap" transaction. Note that foreign exchange swap lines between most central banks expired Dec. 31, 1998 and were not renewed at the Federal Reserve's behest. There are sometimes issues of timing in intervention that affect a country's interest rates (foreign exchange settles in one day, some swaps in two) and these timing differences sometimes give misleading signals to interest rate analysts.
• SSFI - Systemically Significant Failing Institutions Program, another key component of the TARP, providing capital on a case-by-case basis to financial institutions at substantial risk of failure.
• Stochastic Oscillator - Compares where a security's price has closed relative to its price range over a specifically identified period of time. George Lane, who developed this indicator, theorized that in an upwardly trending market, prices tend to close near their high; and during a downward trending market, prices tend to close near their low. Further, as an upward trend matures, price tends to close further away from its high; and as a downward trend matures, price tends to close away from its low. The stochastic indicator attempts to determine when prices start to cluster around their low of the day for an uptrending market, and when they tend to cluster around their high in a downtrending market. Lane's theory is that these are the conditions which indicate a trend reversal is beginning to occur.
• Stop loss orders - A trader may leave an order with his broker to sell any security if its market price declines to the specified level; selling will "stop" your losses.
• STRIPS - Separate Trading of Registered Interest and Principal of Securities, officially sanctioned U.S. Treasury zero coupon securities; the program allows dealers to buy/sell just the semi-annual coupon or the corpus, which are assigned differing CUSIPs, and also to put them back together (reconstitution).
• Swap Lines - Central bank agreements to exchange a certain amount of two currencies and to unwind the currency exchange at a future date.
• Swaps - There are two types of swaps:
  1. the owner of a face amount of debt may choose to swap fixed for floating rate depending on his cost of capital; in currencies may swap one currency for another, depending on the interest rates in various countries; these are well developed markets regulated by the International Swaps and Derivatives Association (ISDA) where swap quotes are written xx(pay)/yy(get).
  2. the owner of a bond may "swap" (pay some cash and turn over the bond he currently has to the dealer) for another security for various reasons, such as higher yield, tax purposes, maturity extension, expected event such as ratings downgrade, etc.
• SWIFT - Society for Worldwide Interbank Financial Telecommunications, an automated system in place since 1977 used for transferring among banks payment instructions written in a standard format.

- T -

• TAF - Term Auction Facility was the first of the Federal Reserve innovations designed to help get credit markets through the crunch. Established on December 12, 2007 to auction term funds to depository institutions against the wide variety of collateral that can be used to secure loans at the discount window.
• TALF - Term Asset-backed Securities Loan Facility announced by the Federal Reserve on November 25, 2008 to "help market participants meet the credit needs of households and small businesses by supporting the issuance of asset-backed securities (ABS) collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration (SBA)."
• Technicians - Traders who study charts for patterns involving prices and volume (which confirms price moves); they fall into several categories such as Dow theorists, Elliot Wavists, Candle Stick Chartists, etc.
• TIP - Targeted Investment Program established by the Treasury Department to cover $20 billion of TARP fund invested in Citigroup Dec. 31, 2008, and may be made available on a "case-by-case" basis to other institutions whose failure would "threaten the viability of creditors and counterparties."
• TIPS - Treasury Inflation Protected Securities, sometimes called IIS (Inflation-indexed Securities) by the US Treasury.
• Third decimal - As in a 5.252% yield. Third place is 1/8s of 1/32, therefore the numbers are always 2, 4, 6 or 8.
• TSLF - Term Securities Lending Facility announced on March 11, 2008 to expand the securities lending program. Will end Treasury securities to primary dealers for a term of 28-days by a pledge of other securities, including federal agency debt, federal agency residential mortgage-based securities, and non-agency AAA/Aaa-rated private label residential MBS.

- U -

• Underweight - Wall Street strategy departments maintain "model portfolios" which "weight" asset classes according to predictions of how well they will perform — and the weights in the models can be higher (over-weighted) or lower (under-weighted) compared to the assets' proportional dollar-share of world financial markets. It is a big deal when changes in weightings are announced by major firms, such as Goldman Sachs or Merrill Lynch or some other firm that has a lot of money under management, because it means the firms will sell/buy that asset class until the portfolios come in line with the percentages specified in the new model.

- V -

• Vanilla - Or plain vanilla, i.e., the most simple case of anything. For example, a vanilla swap is a swap of fixed for floating, or vanilla financing is a term issue or a series of term issues without call provisions.

- W -

• When-Issued or WI - Or more precisely, WII (when, if, and as issued) are securities that have been announced by the U.S. Treasury but not settled (paid for by dealers and investors). Treasury Circular 3000 specifies that the government may cancel any issue until it is paid for; dealers contract to sell the securities "WI" as a result and all trading settles on the specified date; technically a U.S. Treasury is WII from date of announcement to date of auction, then WI from auction time to settlement.
• Wings, The - The end securities of a butterfly trade, i.e., a 2-5-10-year butterfly, where the wings means the 2s and 10s; a trader buys the 2s and 10s and sells a duration-weighted equivalent of the 5-years as a hedge.
• Wire - FedWire, the telegraph money transfer system used to settle bank to bank transactions.
• Wire house - A customer-oriented stock brokerage, such as Merrill Lynch or Paine Webber; these firms often also run subsidiaries that trade bonds or underwrite securities.

- X -

- Y -

• Yard, A - $1 billion of bonds for sale or purchase at one time.

- Z -