• 14 hours The $90M Inflatable Rabbit Redefining Modern Art
  • 17 hours Huawei’s Fate In The Air
  • 20 hours Tesla Slashes Prices Again
  • 22 hours The Modern History Of Financial Entropy
  • 2 days Italy’s Central Bank Embraces Sustainable Investing
  • 2 days Trump Lifts Metals Tariffs To Cool Simmering Trade War
  • 2 days Researchers Push To Limit Space Mining
  • 2 days Could China Start Dumping U.S. Treasury Bonds?
  • 3 days Is Winter Coming For HBO?
  • 3 days Rise Of EVs Signals Peak Gasoline
  • 4 days Jeff Bezos Doubles Down On Space Colonization Ambitions
  • 4 days Gold Mining Stocks Stuck In Limbo
  • 5 days Executive Order Targets Huawei Over Espionage
  • 5 days Why Now May Be The Best Time Ever To Hold Gold
  • 6 days Fake News Sinks Shares In UK-Based Bank
  • 6 days De Beers To Build $468 Million Diamond Recovery Ship
  • 6 days Moody's: Turkey Faces Possible Credit Downgrade
  • 6 days Tesla's Solar Sales Are Slipping
  • 7 days Auto Industry To Get Temporary Tariff Relief
  • 7 days Welcome To The World’s Biggest Free Trade Area
Market Sentiment At Its Lowest In 10 Months

Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

Strong U.S. Dollar Weighs On Blue Chip Earnings

Strong U.S. Dollar Weighs On Blue Chip Earnings

Earnings season is well underway,…

Prieur du Plessis

Prieur du Plessis

With 25 years' experience in investment research and portfolio management, Dr Prieur du Plessis is one of the most experienced and well-known investment professionals in…

Contact Author

  1. Home
  2. Markets
  3. Other

European Interbank Spreads Easier, But Have a Way To Go

In order to gauge whether credit conditions in Europe are improving or worsening, I posted an article on the European TED spread a few days ago - "What is the European TED spread signalling?"

The difference between the LIBOR rate and the overnight index swap (OIS) rate is another measure of credit market stress.

When the European LIBOR-OIS spread is increasing, it indicates that banks believe the other banks they are lending to have a higher risk of defaulting on the loans so they are charging a higher interest rate to offset this risk. The opposite applies to a narrowing European LIBOR-OIS spread.

As shown below, the movement in the European LIBOR-OIS spread over the past few weeks is similar to the European TED spread and indicates that confidence in interbank lending has started improving, but the European LIBOR-OIS spread needs to show a more meaningful decline in order for a calmer environment to prevail.

European LIBOR-OIS
Source: Fullermoney.com

European LIBOR-OIS
Source: Fullermoney.com

 


Did you enjoy this post? If so, click here to subscribe to updates to Investment Postcards from Cape Town by e-mail.

 

Back to homepage

Leave a comment

Leave a comment