Today's LIBOR Rates
1 M |
0.25781 |
 |
3 M |
0.29281 |
|
6 M |
0.49363 |
|
1 YR |
0.83488 |
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July 5, 2010
Rates for Euro LIBOR jolted midweek following the European Central Bank’s (ECB) lower-than expected figures in its three-month refinancing operation. Curtailment of liquidity by the ECB has been anticipated and with it an expected rise in Euro LIBOR. 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, iMarketNews.com reported a new rise in Three-Month Euro LIBOR to a seven-month high of 0.70625%. The article attributed the increase to overall pressure in the eurozone banking industry. LIBORATED.com has presented media accounts of the European debt crisis as the travails of financially unsteady countries such as Greece, Spain and Portugal have roiled markets and triggered widespread speculation about which banks will be left exposed to the bad national debt.
At the same time, U.S. Dollar LIBOR moved lower after having been on the rise for the past several weeks. Three-Month Dollar LIBOR was 0.53344%, a decline of 0.125 basis points versus the previous mark. The article noted the LIBOR/OIS Spread in U.S. Dollars had tightened to 33.54 basis points, as a smaller spread indicates banks’ increased willingness to lend.
Wednesday brought the news that jolted Euro LIBOR: the ECB provided €131.9 billion in its Long-Term Refinancing Operation (LTRO), an amount far below market expectations. Three-Month LIBOR spiked 1.81 basis points to 0.70625%, the highest mark in nearly 10 months. Nevertheless, Euro LIBOR/OIS Spread actually tightened as anticipated central bank rates—the OIS component—rose as part of the ECB’s overall move to tighten liquidity.
On Thursday, iMarketNews.com reported a continued rise in Euro LIBOR coinciding with the ECB’s multi-day LTRO offerings. Concurrently, Three-Month Sterling LIBOR held steady at 0.73156% and Three-Month U.S. Dollar LIBOR fell to 0.53331%.
On the same day, The Wall Street Journal quoted an expert futures broker as saying the ECB’s action would not result in higher interbank rates being charged to American institutions, thereby insulating Dollar LIBOR from the forces escalating Euro LIBOR. Per the article, September Eurodollar futures predicted Three-Month Dollar LIBOR would reach 0.645%, a lower than estimates of 0.665% and 0.655% during the week. On Friday, The Wall Street Journal reported a predicted Three-Month U.S. Dollar LIBOR of 0.625%.