Today's LIBOR Rates
1 M |
0.25781 |
 |
3 M |
0.29281 |
|
6 M |
0.49363 |
|
1 YR |
0.83488 |
|
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May 1, 2010
LIBOR moved higher throughout the week due to a combination of good and bad economic news that jointly inspired banks to raise their interbank lending rates. LIBOR stands for London Interbank Offered Rate and is a filtered average of rates that banks charge each for unsecured, short-term loans.
On Monday, Reuters reported a rise in Three-Month LIBOR for the U.S. Dollar, driven by the expectation that the Federal Reserve will raise rates as the American economy continues to improve. The key LIBOR rate reached 0.32375%, versus 0.32063% the previous Friday. LIBORATED.com has reported on banks’ approval of activist central bank programs of low rates and increased liquidity to prop up economies. When economic conditions improve, central banks reverse such programs in order to stem potential inflation. In turn, banks become more uneasy about markets, responding with higher interbank loan rates. LIBOR follows suit with increases.
| On Tuesday, iMarketNews.com quoted an expert who summed up increases in LIBOR: anticipation of increased costs of funding for banks due to central bank rate hikes and the specter of Greece and Portugal’s financial troubles roiling markets. This good news/bad news mix is compelling banks to boost their rates, per the article. On this day, The Wall Street Journal reported the following LIBOR movement: |
- Three-month U.S. LIBOR up to 0.32781%
- Three-month Euro LIBOR up to 0.58750%
- Three-month Sterling LIBOR unchanged at 0.66375%
The Wall Street Journal reported on Wednesday that futures contracts for Eurodollars anticipated higher LIBOR rates for year’s end and 2011, confirming the effect of central bank rollbacks and Greek/Portuguese uncertainty.
The trend continued Thursday as Reuters reported Three Month U.S. Dollar LIBOR rates at the highest level since August 2009. Concurrently, the LIBOR/OIS Spread in U.S. Dollar widened to its largest divergence since December 2009. The LIBOR/OIS Spread compares three-month LIBOR rates to the historically more stable OIS (overnight indexed swap), an anticipated monthly average of central bank rates. The wider the gap, the more reluctant banks are to lend.