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More Liquidity Tremors: Overnight Eur Libor Doubles To 1.78%, Highest Since Early 2009

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http://www.zerohedge.com/article/more-liquidity-tremors-overnight-european-libor-doubles-178-highest-early-2009

Whether the move in overnight Libor is due to an end of quarter window dressing scramble by the banks who in a Repo 105 fashion are doing their best to seem healthy, or it is due to the recent evaporation of European money market funds which are going into US securities, leaving Europe high and dry, is unclear; what is clear is that overnight EUR Libor just doubled, exploding by an unprecedented 85.5 bps to 1.78%, the highest it has been since early 2009 (see chart). Why is this troublesome: because the USD overnight Libor is at 0.128%, which is to be expected courtesy of the recent very much expected extension on the Fed's swap lines with European banks. But it does beg the question: instead of the traditional shortage of USD on every risk precipice, is there suddenly a massive black hole in overnight EUR funding, and has Chinese buying of euros by the bushel backfired and is about to further hobble European, and US, liquidity.

Overnight%20Libor%206.30%20ST.jpg

Has this come back down again?

More printy printy is clearly needed to fix this.

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Encouraging, but FFS will the 'end of the world as we know it' just get a bloody move on. It's like watching paint dry. I might have to get a bloody job if this eye of the storm cr@p carries on much longer. :angry:

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Encouraging, but FFS will the 'end of the world as we know it' just get a bloody move on. It's like watching paint dry. I might have to get a bloody job if this eye of the storm cr@p carries on much longer. :angry:

If you know where the storm is going you can stay in the eye for a very long time....

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Has this come back down again?

More printy printy is clearly needed to fix this.

Perhaps... conversely - the Euro deposit (base) rate doubled from 0.25% to 0.5% in April - and there are rumours that it might go up again soon. While 1.78% is preposterously low, I'd expect LIBOR to be close to the base rate - which it isn't. One interesting thing to look at would be the difference between LIBOR and LIBID... as the spread might give us further insight.

One possibility is that the difference is a risk premium - which would suggest that "the market thinks" that a major bank might fail... which would fit in with risks arising from Greece. Another possibility is that so little money is borrowed at LIBOR that its level makes no significant difference to participants - hence its measurement becomes a farce.

P.S. I wish there were a web-site where this sort of thing is discussed (other than here) where all this sort of information is available for quick and easy analysis.

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Dow is soaring and has soared since Greece was 'fixed'!

FTSE, too. What remains to be seen - I guess - is if this is temporary irrational exuberance. Both thinking Greece is 'fixed' and the rising equity prices.

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One possibility is that the difference is a risk premium - which would suggest that "the market thinks" that a major bank might fail...

Good analysis, I have a link to some work that might be of interest.

zero hedge

When considering the staggering level of derivatives employed by JPM, it is frightening to even consider the fact that the quality of JPM's derivative exposure is even worse than Bear Stearns and Lehman's derivative portfolio just prior to their fall. Total net derivative exposure rated below BBB and below for JP Morgan currently stands at 35.4% while the same stood at 17.0% for Bear Stearns (February 2008) and 9.2% for Lehman (May 2008). We all know what happened to Bear Stearns and Lehman Brothers, don't we???

Edited by gravity always wins

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Dow is soaring and has soared since Greece was 'fixed'!

It appears that way because that's what you think you're seeing.

Do you remember your 'Black Week - Weds/Thursday' thread?

Well as I said on that thread - you would perfectly nail the opposite condition i.e. the lows.

DJIA bottomed and reversed precisely on Wed/thu 15/16th June

http://stockcharts.c...id=p25257795100

FTSE duly obliged too

http://stockcharts.c...id=p12517696596

You just 'read' that as 'Greece' but it was going to happen anyway.

Link to your thread

http://www.housepricecrash.co.uk/forum/index.php?showtopic=164972&pid=3030155&st=60entry3030155

Edited by Red Karma

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FTSE, too. What remains to be seen - I guess - is if this is temporary irrational exuberance. Both thinking Greece is 'fixed' and the rising equity prices.

Looks like tomorrow is "cash in your equities before the shit really hits the fan" day B)

Edited by goldbug9999

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  • 311 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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