The 3-month Libor rate is again creeping higher
The 3-month Libor rate is again creeping higher after the dip on Monday broke a string of 41 consecutive session increases. The rate is just over 2.341%, having attained the 2-handle in late February, and is out from 1.69693% to start the year. Meanwhile, the Libor-OIS spread, has narrowed fractionally to 58.6 bps, though is still just off its widest level at 59.3 bps since the financial crisis. And it's more than doubled the 26.3 bps where it began the year. However, analysts continue to attribute the rise in Libor and the gapping in the spread to factors including heavy bill and CP issuance, expectations of cash repatriation, and the FOMC's tightening and normalization path, rater than a sign of financial market stress. Note that Libor hit the 5% mark back on March 31, 2006 and held that handle through October 2007 amid the crisis, with the Libor-OIS spread as wide as 364 bps in October 2008. But while the rising rate and wider spread may not be signaling market stresses, they are tightening financial conditions, especially on floating rate debt obligations.