Friday July 03, 2009
NEW YORK: Dollar borrowing costs between banks fell again on Thursday, hitting the latest in a series of all-time lows, but dismal US jobs data raised doubts over when the easy money would lift the economy. This took the shine off news that closely-watched London interbank offered rates for bank-to-bank lending fell to another record low. It also reminded analysts this had been achieved mainly by massive and continued Fed support.
"I do think overall it's a positive to have Libor coming down from the abnormally-distressed levels that we've seen over the last year, but I'm a little cautious because it is also a medicated market," said Jeff Given, a portfolio manager for fixed income with John Hancock Funds in Boston. Three-month dollar Libor fell to 0.5775 percent, a record low, from 0.5875 percent.
Driving the decline has been the Fed's zero-rate monetary policy and its myriad programs and facilities designed to pump money into a financial system that suffered its worst crisis since the Great Depression of the 1930s. A key gauge of risk aversion also reflected the continued normalisation of financial conditions. The TED spread remained pegged at levels that prevailed just before the start of the financial crisis nearly two years ago.
(Reuters)
NEW YORK: Dollar borrowing costs between banks fell again on Thursday, hitting the latest in a series of all-time lows, but dismal US jobs data raised doubts over when the easy money would lift the economy. This took the shine off news that closely-watched London interbank offered rates for bank-to-bank lending fell to another record low. It also reminded analysts this had been achieved mainly by massive and continued Fed support.
"I do think overall it's a positive to have Libor coming down from the abnormally-distressed levels that we've seen over the last year, but I'm a little cautious because it is also a medicated market," said Jeff Given, a portfolio manager for fixed income with John Hancock Funds in Boston. Three-month dollar Libor fell to 0.5775 percent, a record low, from 0.5875 percent.
Driving the decline has been the Fed's zero-rate monetary policy and its myriad programs and facilities designed to pump money into a financial system that suffered its worst crisis since the Great Depression of the 1930s. A key gauge of risk aversion also reflected the continued normalisation of financial conditions. The TED spread remained pegged at levels that prevailed just before the start of the financial crisis nearly two years ago.
(Reuters)
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