U.S. Dollar (Eurodollar) LIBOR Rates

The London Interbank Offered Rate (LIBOR)
from the interest-rate specialists at www.FedPrimeRate.comSM

Thursday, October 13, 2016

LIBOR Continues to Rise Away from The Fed's Benchmark

3-Month Eurodollar LIBOR vs. The Fed Funds Target Rate
LIBOR vs. Fed Funds Target Rate
The 3-month Eurodollar LIBOR rate has been rising away from the Fed's benchmark fed funds target rate for some time now (see the green circle in the image on the left.)

Why?  Because of the U.S. Securities and Exchange Commission's (SEC) response to the severe financial-market turmoil that occurred during the worst of the 2008 banking crisis.  On September 15, 2008,  investment bank Lehman Brothers collapsed, and the Reserve Primary Fund, a large and now defunct money market mutual fund, which had much exposure to Lehman's debt, broke the buck.

The Sec's Final Rule kicks in tomorrow (October 14, 2016.)

Will U.S. dollar LIBOR rates continue to creep higher after tomorrow?  Probably, into December, because the likelihood of another rate increase by the Fed by the end of 2016 continues to rise.

Stay tuned...

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