OK: Now I am happy. Now I see "green shoots".
David Oakley in the FT:
Libor hits record low as credit fears ease: London interbank money market rates – the amount banks charge to lend to each other – fell to record lows on Tuesday in a further sign that the credit markets are thawing. The key three-month lending rates for the dollar fell below 1 per cent for the first time. The previous all-time low was 1 per cent in June 2003. The fall in the Libor rates is a key sign of revival in financial markets. It suggests confidence among investors is growing and that the global economy is past the worst of the financial crisis. This confidence has also been reflected in the sharp rise in the equity markets, which are about 20 per cent higher since their lows in early March.
Significantly, the three-month euro and dollar and Libor spreads over market overnight interest rates – considered a pure measure of credit risk – have fallen to their lowest levels since Lehman Brothers collapsed in September. Don Smith, economist at inter-dealer broker Icap, said: “Conditions are improving with some signs of confidence coming back to the market.” However, he warned: “We have to remember, we are still nowhere near back to the strength of activity we saw before the credit crisis. It is still a desert for unsecured lending beyond three months.” Dollar Libor for three-month money jumped to 4.82 per cent following the collapse of Lehman in September. It has fallen steadily this year, helped by the US Federal Reserve’s near-zero interest rate policy and fiscal stimulus programmes to boost the economy and bail-out the beleaguered banks. Euro and sterling Libor rates for three-month lending have also steadily fallen this year, helped by the Bank of England and European Central Bank cutting base rates to historic lows in the past two months. The record low dates back to 1984 when the British Bankers Association began a trial period for its Libor settings; official BBA rates began on January 1, 1986.
The fall in the cost of Libor is important as the rates are used as a reference to price billions of dollars of mortgages, loans and corporate bonds. The rate, set by the British Bankers’ Association in London, determines borrowing costs on about $360,000bn of products worldwide, according to Bloomberg data. Three-month dollar Libor on Tuesday fixed at 0.98 per cent, three-month euro Libor fixed at 1.34 per cent and three-month sterling Libor fixed at 1.43 per cent...
The U.S. Treasury-Eurodollar spread: