big beg to differ on this one
the LIBOR has been artificially suppressed through the efforts of the US Fed's TAF program
as one commentator puts it:
"What was the term auction credit facility really set up for? In the direct words of the Fed themselves, the TAF “could help ensure that liquidity provisions can be disseminated efficiently even when the unsecured interbank markets are under stress”. What is the headline representation of the “unsecured interbank markets”? Easy – LIBOR (the London interbank offer rate). Point blank, the TAF was in very good part set up to talk LIBOR down, if you will. And this is exactly what has happened. Gone is the “distress” seen in LIBOR during the October period of last year, long gone. And as you already know, LIBOR is one of the key headline "symbols" of global credit market conditions. Good to know all is well, right?
Maybe more than any other headline credit market indicator of the moment Fed actions have distorted what used to be the prior “risk based” message of LIBOR. And that cuts right to the conceptual heart of government intervention. Just how the heck can the private sector assess risk and allocate capital correctly and efficiently when the Fed/Treasury/Administration is acting to help “misprice” assets and risk measures? There will be no true recovery in the economy and capital markets until risk is being priced appropriately and all risks are known (the issue of transparency). Make no mistake about it; the decline in LIBOR is not a result of credit market healing and the lessening of risk perceptions. It’s a result of the Fed TAF. And so once again, how do they step away from this intervention?" (go to ZeroHedge for more...)
good luck
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