Not Quite Joltin’ Joe DiMaggio
The cost of borrowing in dollars between banks rose for a second day amid concern some financial companies are still struggling to ride out the two-year squeeze on credit.
The London interbank offered rate, or Libor, for three- month loans increased one basis point to 0.67 percent, according to the British Bankers’ Association. It’s the first time the rate has increased on consecutive days since March 26. It snapped 38 days of declines on Wednesday.
The TED spread, the difference between what banks and the U.S. Treasury pay to borrow for three months, increased to 51 basis points. It’s still near the lowest level since August 2007 when the credit crisis began.
The Libor-OIS spread, another gauge of banks’ reluctance to lend, was at 46 basis points, the highest since May 20. It averaged 11 basis points in the five years preceding the financial crisis. The spread between three-month Libor and the Fed’s target rate for overnight loans between banks was 42 basis points today, twice the average in the five years through July 30, 2007.
Tags: Credit Crisis, LIBOR, TED, U.S. Treasury
