Signs are emerging that frozen credit markets in New York and and London may finally be starting to thaw after the raft of unprecedented liquidity injections, bank recapitalisations and interest rate cuts in the last two weeks. The LIBOR rate for three month loans in US dollars fell 36 basis points to 4.06% overnight. The closely watched TED spread, which measures the difference between the 3 month LIBOR rate and the 3 month US Treasury bill yield, fell as much as 70 basis points overnight to 293 basis points and is now well off its highs of October 10 of almost 450 basis points. The thaw appeared to begin on Friday evening when US banks JP Morgan and Citigroup started lending in New York and London to other banks. * This article was first published exclusively yesterday in our daily subscription newsletter for the banking and finance industries. The email costs NZ$365 per annum and carries exclusive news and analysis for New Zealand banking and finance industry executives, regulators and investors. Sign up for a free trial here.
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