According to a report, the New York Fed is concerned about European banks and the funding of their U.S. operations.
Here is an excerpt of the Wall Street Journal article describing the situation:
In one sign of how European banks may be having trouble getting dollar funding, an unidentified European bank on Wednesday borrowed $500 million in one-week debt from the European Central Bank, according to ECB data. The bank paid a higher cost than what other banks would pay to borrow dollars from fellow lenders. It was the first time for that type of borrowing since Feb 23.
Last week's initial jobless claims were revised up by 4,000 jobs, and this week's initial claims came in at 408,000 (consensus was 400,000).
Continuing claims were in line with estimates.
The conclusion is that the jobs market has stabilized but is not improving.
Memories of financial disaster are now fresh, as after the Great Depression, causing an over-estimation of the probability of a repeat disaster. In these situations, psychological scarring is likely to result in risk appetite and risk-taking being lower than reality might suggest. Risk will be over-priced. Today, the very disaster myopia that caused the crisis may be retarding the recovery.
-- Andrew Haldane, Bank of England
The Philly Fed for August was a shocker, falling to -30.7 vs. a consensus forecast of up 2%.
That is the lowest read since April 2009.
New orders plummeted, backlogs were down, shipments dropped, and employment deteriorated.
The Philly Fed cited the weakness as a function of "unusually high volatility in both domestic and international financial markets."