Today's LIBOR Rates
1 M |
0.31563 |
 |
3 M |
0.47500 |
|
6 M |
0.68794 |
|
1 YR |
1.06438 |
|
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US Dollar LIBOR/OIS Spread Widens |
January 28, 2010
According to Market News International, the LIBOR/OIS spread for the US Dollar has widened following “hawkish” comments from the Federal Reserve on the direction of the American economy. LIBOR stands for London Interbank Offered Rate and is a filtered average of rates that banks charge each other for short-term, unsecured loans.
The Federal Reserve’s statement released midweek sees improving American economic trends and shoring up in the job market. Historically, this would mean that the Fed would begin to raise its rock-bottom interest rates as the economy needs less support. The LIBOR/OIS Spread is an index that compares Three-Month LIBOR rates to the overnight indexed swap, an anticipated average of federal funds rates. The smaller the spread, the more LIBOR is hewing to the traditionally more stable OIS component, which bespeaks greater bank confidence. In the latest LIBOR/OIS shifts, the OIS component is moving upward as markets anticipate higher rates from the Fed.
LIBORATED.com has reported on LIBOR’s relationship to central bank actions. In general, LIBOR responds positively to “activist” central bank policies of low rates and liquidity programs.