Bloomberg gives today’s sighting on money market conditions. Rates continue to improve but remain at elevated levels:
Money-market rates in London dropped as cash injections by central banks and the prospect of deeper reductions in borrowing costs worldwide showed signs of revitalizing confidence in lending.
The London interbank offered rate, or Libor, that banks charge each other for three-month loans in dollars fell 5 basis points today to 3.42 percent, its 13th straight decline, according to the British Bankers’ Association. The comparable euro rate slipped 2 basis points to 4.83 percent, the 15th consecutive reduction. Asian rates were lower.
“The strains in money markets are beginning to ease, but only at a glacial pace,” said Nick Stamenkovic, a fixed-income strategist in Edinburgh at RIA Capital Markets. “Central banks are flooding the money markets with liquidity and that’s bringing rates down. Banks remain very wary of lending to one another though, and I don’t see that changing anytime soon.’…
Today, the European Central Bank loaned banks $106.6 billion for one week and 103.1 billion euros ($132 billion) for three months.
The three-month dollar Libor has dropped 140 basis points since Oct. 10, when it rose to 4.82 percent, the highest since Dec. 27. The comparable rate for euros lost 56 basis points since Oct. 8, the last time it increased….
The three-month Libor for dollars remains 192 basis points above the Fed’s rate, up from 80 basis points three months ago. The Libor-OIS spread was at 260 basis points today, compared with 87 points before Lehman filed for bankruptcy.
Futures on the Chicago Board of Trade show a 48 percent chance the Fed will lower its target for overnight bank loans today to 0.75 percent from 1.5 percent. The odds were zero a week ago. The rest of the bets are for a half-point reduction.