Ted spread on the rise as eurozone sovereigns remain stable
The New Year has seen the Ted spread, a perceived level of counterparty risk, reach its lowest level since Lehman Brothers filed for Chapter 11 bankruptcy on September 15 last year. Elsewhere, interbank lending rates continued to fall.
Despite continued market unrest, healthier interbank lending rates over the past week indicate financial institutions are increasingly confident in lending to one another, while the perceived level of counterparty risk, as measured by the Ted spread,...
The sterling interbank borrowing rate has dropped significantly after the Bank of England's (BoE) move to cut interest rates to their lowest levels since 1951 on Thursday.
The cost of dollar lending in the interbank market rose 17bp overnight, but the cost of euro and sterling borrowing was down marginally today.
Overnight euro Libor remained unchanged from yesterday at 2.9%, despite the announcement a €200 billion stimulus package to shore up the struggling economies of European Union (EU) member states.
Volatility in the US equity market is at near-record levels, but the interbank market remained stable today.
Overnight dollar lending rates rose today following the news that US banking giant Citi will receive additional government assistance.
Interbank confidence has shown no signs of falling today even as global equity markets have plummeted.
The perceived level of counterparty risk in the market continued to fall today, shown by a drop in the Ted spread and Libor.
Interbank lending confidence rose today, marked by a 0.17 percentage point fall in three-month dollar Libor.
The proposals of world leaders to stabilise financial markets had little significant impact on the interbank market, with the Ted spread and Libor figures remaining at similar levels to before the weekend.
Dollar Libor and the Ted spread, which tracks the difference between three-month dollar Libor and Treasury bills, were up today as confidence in the US interbank lending market dipped again.
Dollar Libor was up today following US Treasury secretary Hank Paulson's admission yesterday that the Troubled Asset Relief Programme (Tarp) will not be used to buy illiquid mortgage-backed securities.
The Bank of England (BoE)'s predictions of continued economic downturn failed to move the sterling interbank markets today.
Following last week's rate cuts, the Ted spread, which tracks the difference between three-month Libor and Treasury bills, had fallen today to 2.01 when trading opened, the same level as September 15, when Lehman Brothers filed for bankruptcy.
At 1200 GMT, the Bank of England (BoE) announced a 1.5% reduction of the official bank rate, while interbank lending rates fell further.
Confidence in the interbank market climbed today, reflected in the decline of the Ted spread and Libor rates.
Interbank confidence continued to rise today, reflected in the fall of the Ted spread and certain Libor rates.
Libor rates fell across the board today, as stock markets in Europe and Asia continued to pick up and the US Federal Reserve announced a 50 basis point rate cut.
The Ted spread, the difference between US Treasury bills and three-month Libor, fell today for the first time since October 6, following the news of the planned European bank rescue package.
Perceived counterparty risk in the financial system reached new heights today as the Ted spread, the difference between three-month Libor and US Treasury bills, opened at a record 4.64%.