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 29, 2010
This week saw continued rises in LIBOR rates as worries from the eurozone debt crisis persisted. During the same period, stock markets plunged in daily trading, exhibiting their typical downward movement in the face of bad news. LIBOR stands for London Interbank Offered Rate and is a filtered average of rates that banks charge each other for unsecured, short-term loans.
On Monday, The Wall Street Journal’s MarketBeat blog advised market watchers to focus less on stocks and more on LIBOR rates as a predictor of market mood and direction. The post noted that Three-Month LIBOR in U.S. Dollars rose from 0.49688% on Friday to 0.50969% on Monday. Financial Times expressed a similar theme as it reported banker predictions of sharp LIBOR spikes of up to 1% stemming in large part from the eurozone crisis. The article also cited the Obama administration’s financial reform movement as another factor pushing LIBOR higher.
On Tuesday, The Wall Street Journal depicted the “higher LIBOR, lower stocks” syndrome as it reported a slump in European stocks concurrent with another LIBOR rate jolt, as Three-Month U.S. Dollar LIBOR moved from 0.50969% to 0.53625%, its highest mark in nearly a year. According to the article, the Bank of Spain’s bailout of regional savings bank CajaSur heightened fears regarding the European sovereign debt meltdown. Spain is one of the “peripheral” countries whose debt load has triggered recent emergency measures by the EU to stabilize the continent’s finances. Also that day, The Wall Street Journal reported that European banks were subject to higher interbank lending rates—the basis of LIBOR—than their US and Asian counterparts.
On Wednesday, Bloomberg BusinessWeek reported on the LIBOR rate elevation for the Three-Month index in U.S. Dollars along with an expert opinion that Greece’s debt will have to be restructured eventually. Greece has been the epicenter of the eurozone debt crisis and has accepted severe economic austerity measures in exchange for its fiscal bailout. The article also reported a slight contraction in the LIBOR/OIS Spread for U.S. Dollars, a LIBOR-based indicator of banks’ willingness to lend, with a tighter spread indicating more willingness.
On Thursday, MarketWatch revealed a slowing of the rise in U.S. Dollar LIBOR rates and further tightening of the LIBOR/OIS Spread. Bloomberg BusinessWeek presented an opinion from Morgan Stanley that LIBOR’s recent elevation will not reach the panic highs of 2008 triggered by the collapse of giant firms such as Lehman Brothers and AIG. The following day, The Wall Street Journal corroborated the easing pressure on LIBOR, helped by statements from China that it would still invest in European bonds and the United States Federal Reserve that it sees American and European economic recovery holding a steady