• 17 hours Tesla Tumbles After Battery Day Fails To Impress
  • 24 hours Three Energy ETFs To Watch This Decade
  • 2 days What To Do With $2 Trillion In Suspicious Bank Transactions?
  • 3 days How The Stock Market Predicts Electoral Victory
  • 3 days Tesla's "Battery Day" Could Deal A Blow To Cobalt Miners
  • 4 days New TikTok Deal Hopes To Bypass National Security Concerns
  • 4 days Where Will Gold Go From Here?
  • 5 days COVID-19 Is Fueling A Pastic Waste Crisis
  • 5 days Gold Output Set To Decline
  • 6 days Uber And Lyft Look To Go Electric
  • 7 days COVID-19 Is Crushing Palladium Demand
  • 8 days This ‘Once-Boring’ Tech Company Is Now Super Hot
  • 9 days Will Air-Based Protein Be Our Future Food?
  • 9 days Google Pledges To Go Carbon-Free By 2030
  • 10 days A New Twist In The TikTok Saga
  • 10 days Gold Inches Closer To $2,000
  • 11 days Delivery Drones Are Coming Sooner Than You Think
  • 11 days Traders See More Volatility Ahead For Commodities
  • 12 days How COVID-19 Is Transforming The World's Sovereign Wealth Funds
  • 12 days Electric Vehicle Demand Set To Outpace Battery Metal Production
What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

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