Socio-Economics History Blog

Socio-Economics History Blog

Libor Surge is Nearing Danger Level for Debt-Drenched World

by mosesman
ZeroHedge: Meanwhile, we’ll just note that the same Libor-OIS (or its intraday updated cousin, the FRA-OIS) we highlighted less than a week ago when it was “only” 32.7bps, has blown out by 8 bps in just the past week, and is now over 40bps, the widest since October 2016 and blowing out, a huge move when one considers the hundreds of billions in TRS and other layered swaps levering even one basis point. https://www.zerohedge.com/news/2018-02-27/libor-ois-blows-out-libor-rises-above-2-first-time-10-years
  • Libor Surge is Nearing Danger Level for Debt-Drenched World
    by AMBROSE EVANS-PRITCHARD, https://www.telegraph.co.uk/
    The stress signals of the global credit system are flashing amber. The offshore dollar funding markets that lubricate world finance are facing an incipient squeeze.
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    The “Libor-OIS spread’ – watched carefully by traders – has risen to levels reached during the onset of the Chinese currency crisis in early 2016, and during the onset of the Italian and Spanish funding crisis in late 2011.
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    The three-month rate for dollar Libor (London Interbank Offered Rate) used to price a vast nexus of financial contracts around the world has spiked to a 10-year high of 2pc this week. A third of all US business loans are linked to Libor, as are most student loans, and 90pc of the leverage loan market. The US can…
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    read more.

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