Post by AggieGroove on Oct 13, 2008 19:35:47 GMT -5
Wanted to start a thread on credit lending rates as an indicator of what might happen in that market....I am starting the believe governments are holding a massive amount of $ putting future generations at risk...I hope it is not the ladder!
www.ft.com/cms/s/0/af8d1c04-9943-11dd-9d48-000077b07658.html
London interbank lending rates ease
By Michael Mackenzie in New York
Published: October 13 2008 17:42 | Last updated: October 13 2008 17:42
Money market rates set in London eased on Monday as central banks and governments in Europe and the UK intensified efforts to thaw frozen lending conditions.
Benchmark lending London Interbank Offered Rates are expected to ease further from their highly elevated levels as European policy makers look to implement a guarantee for bank debt of up to five years until the end of 2009. The UK will also guarantee new bank debt of up to three years as it recapitalises some of its banks.
Lending between banks and investors in the Libor market has been largely frozen since Lehman Brothers’ bankruptcy sparked a breakdown in trust between financial institutions, which act as counterparties to each other in short-term lending.
“In my view the funding guarantee combined with recapitalisation should be enough to reduce counterparty risk,” said Marco Annunziata, chief economist at UniCredit Markets.
Analysts at Credit Suisse said: “We suspect Libor will cease to fix higher in coming weeks, and implementation of the plans will prove the catalyst for a significant drop in Libor fixings.”
On Monday, the US Federal Reserve announced an increase in the size of its temporary dollar swap facilities with the Bank of England, the European Central Bank, and the Swiss National Bank. The central banks will now provide unlimited amounts of dollar funding for institutions. The Bank of Japan is also considering whether it will join the latest measure.
US fixed income markets were closed on Monday for Columbus Day as three-month Libor rates eased across the main currencies. Euro Libor fell to 5.30 per cent from 5.37 per cent. Dollar Libor eased to 4.75 per cent from 4.82 per cent, while sterling was fixed 1.5 basis points lower at 6.27 per cent for three-months.
Later this week, recent sales of Treasury debt are expected to help alleviate a breakdown in government repurchase or repo transactions. In a repo, Treasuries are borrowed in exchange for short term cash loans. Since the collapse of Lehman, a rising number of borrowed securities have not been returned, sparking a record amount of so-called fails in the repo market.
Let's try to understand this one together especially in the coming days!
www.ft.com/cms/s/0/af8d1c04-9943-11dd-9d48-000077b07658.html
London interbank lending rates ease
By Michael Mackenzie in New York
Published: October 13 2008 17:42 | Last updated: October 13 2008 17:42
Money market rates set in London eased on Monday as central banks and governments in Europe and the UK intensified efforts to thaw frozen lending conditions.
Benchmark lending London Interbank Offered Rates are expected to ease further from their highly elevated levels as European policy makers look to implement a guarantee for bank debt of up to five years until the end of 2009. The UK will also guarantee new bank debt of up to three years as it recapitalises some of its banks.
Lending between banks and investors in the Libor market has been largely frozen since Lehman Brothers’ bankruptcy sparked a breakdown in trust between financial institutions, which act as counterparties to each other in short-term lending.
“In my view the funding guarantee combined with recapitalisation should be enough to reduce counterparty risk,” said Marco Annunziata, chief economist at UniCredit Markets.
Analysts at Credit Suisse said: “We suspect Libor will cease to fix higher in coming weeks, and implementation of the plans will prove the catalyst for a significant drop in Libor fixings.”
On Monday, the US Federal Reserve announced an increase in the size of its temporary dollar swap facilities with the Bank of England, the European Central Bank, and the Swiss National Bank. The central banks will now provide unlimited amounts of dollar funding for institutions. The Bank of Japan is also considering whether it will join the latest measure.
US fixed income markets were closed on Monday for Columbus Day as three-month Libor rates eased across the main currencies. Euro Libor fell to 5.30 per cent from 5.37 per cent. Dollar Libor eased to 4.75 per cent from 4.82 per cent, while sterling was fixed 1.5 basis points lower at 6.27 per cent for three-months.
Later this week, recent sales of Treasury debt are expected to help alleviate a breakdown in government repurchase or repo transactions. In a repo, Treasuries are borrowed in exchange for short term cash loans. Since the collapse of Lehman, a rising number of borrowed securities have not been returned, sparking a record amount of so-called fails in the repo market.
Let's try to understand this one together especially in the coming days!
