The interbank lending markets remained unstable today, after the US Senate agreed to vote on an amended version of the rescue package.The Ted spread, which tracks the difference between three-month Libor and US Treasury bills, reached 3.34% by 1400 GMT today, down from an all-time high of 3.536% on September 29 but up from 3.15% yesterday.
Three-month US dollar Libor climbed still further today, reaching 4.15% from 4.053% yesterday. Three-month euro and sterling borrowing costs reached yearly highs, increasing to 5.285 % and 6.307% respectively from 5.274% and 6.3% on September 30.
The overnight US dollar Libor rate dropped to 3.794% from a record 6.875% yesterday. Overnight sterling borrowing costs also dropped, to 4.9625 % from 6.780%, a trend echoed by the overnight euro Libor rate, which fell from 4.449% to 4.269% over the same period.
The US Congress voted against the Treasury department’s economic rescue legislation on Monday, causing equity markets to slump. However, the Senate agreed yesterday to vote on a revised version of the bill tonight. Several additions have been made - including temporarily raising the limit on federal deposit insurance to $250,000 from $100,000.See also: Interbank lending suffers as $700 billion rescue vehicle breaks down
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