Do not focus so much on the Fed!LIBOR soared this year is the biggest concern

Currently rising LIBOR (LIBOR) is a bigger concern。
In fact, this is "the biggest theme of this year"。 Financial media over the past month has also been said that this year for the most important risk factor is the LIBOR soared assets and the London Interbank Offered Rate and the overnight index swap spreads (LIBOR-OIS) "bursting", which will from short-term financing marginal cost floating rate debt costs to have an impact。 The figure below shows the dollar three-month LIBOR: Libor of 31 consecutive days of gains, and hit its highest level in 2008. As of March 20, US time, Libor since February 7 31 consecutive days of gains, and on March 21 morning touched%, the highest since 2008。 At the same time, LIBOR-OIS spread has doubled since the end of January more than doubled, to basis points, which is seen none since mid-2009 level。 "This is a major market struggling。 Private lending market interest rates to accelerate upward is this year's theme, rather than the Fed。 "JonathanGarner said," In the private market and Libor, rose $ Libor is already far more than the federal funds rate, so you find six-month dollar Libor has actually reached%, while the Federal Reserve federal funds rate rose only 25 basis points to %。 So we actually have made it clear, the real cost of doing business decision is experiencing a substantial increase in interest rates。
Therefore, unless the Fed behaved in a way superdoves, otherwise I think the US monetary policy has been tightened sharply, which is the key reason why we are very cautious on market trends。 "For those who think the most important thing this year is the Fed hawks or doves, and 2018 is to raise interest rates three or four people, JonathanGarner retorted," and the company's financing costs related to the decisive factor is not really the Fed。
In fact the company to borrow six months US dollar Libor interest rate has risen%, which is a key reason for the market struggling, because the private market is accelerating tightening this year's theme, rather than the Fed。
"What does this mean for the global market?JonathanGarner said, "We have a lot of concerns about this year, including a reduction in the Fed balance sheet。 In fact, the US fiscal easing is probably one of the reasons the private lending market is so tight。
There is some evidence that, in fact, issued Treasury bonds to some extent squeezed out of private borrowers, at the same time, the global stock market valuation of the non-financial sector is extremely high, and overly optimistic earnings expectations。 "JonathanGarner concluded," We are very confident that the market in the third week of January has hit its high point, the remainder of the year will be a tough market。
"The situation could be much worse。 LIBOR is usually the leading dollar 3-month leading indicator, which means that the dollar might usher in a wave rally, which will lead to the risk of volatility in the global market。 The following figure shows the three-month Libor-OIS spreads and the dollar index: Equally worrying is that, -OIS Libor interest rate differential expansion that the global shortage of financing, which will eventually lead to financial credit risk。
On behalf of the US financial credit risk IGOAS spreads are wider again towards。
The following figure shows the -OIS Libor interest margin (red line) with the US financial credit risk (blue line), Libor spreads of -OIS generally ahead of the US financial credit risk 3 months。 At the same time, bank credit default swaps (CDS) also rocketed to the widest 6 months。 However, a substantial tightening of financial conditions worst news is that almost no one can clearly explain the reasons for that, it will cause any results。 Canada, Bank of Montreal Capital Markets (BMO) MargaretKerins head of fixed-income strategist said: "We do not usually see this kind of interest rate differences in the absence of some kind of credit problem situation。
The problem is that this will result in damage when the extent of the damage and how much。 "Citigroup had also on the rise and Libor Libor spreads of -OIS warning March 20, Citigroup (Citi) bank MattKing explains why the high and Libor Libor spreads of -OIS is releasing an ominous signal s reason。
"Libor is still most leveraged loans, an important reference interest rate swaps, and some mortgages。
In addition to this direct influence, money market interest rates upward and weak risk assets is most likely to lead to two conditions of mutual fund outflows。
If these in turn trigger further sell-off in the market, so the negative impact of the wealth effect caused on the economy and may even exceed the direct impact of interest rates。 "Note: The term Libor-OIS spreads mainly reflects the pressure of the global banking system credit, spreads widened willingness to be seen as the decline in interbank lending。 London Interbank Offered Rate (LIBOR) is between a British interbank short-term borrowed capital cost of the loan, widely used in the global financial markets, benchmark test is the overall health of the banking sector。
Overnight Index Swap (OvernightIndexSwap, referred to as OIS) is the overnight interest rate swap rates become some fixed interest rate swaps。 Overnight interest rates (OvernightRate) is a financial institutions to use funds on hand to lend overnight loans to another financial institution interest rates。