FT: Borrowing costs remain high

Similarly, euro three-month Libor, which was down 7.37bp at 5.225 per cent on Tuesday remains high.

“The fact that the boldest banking guarantee in history was not worth more . . . raised some eyebrows,” said Christoph Rieger, analyst at Dresdner Kleinwort.

Dollar three-month Libor is reacting better, down 11.75bp at 4.635 per cent, which was accompanied by a 15bp rise in the yield on three-month Treasury bills to 0.4 per cent.

This leaves the so-called Ted spread, which measures the difference between interbank lending rates and risk-free government lending rates, at a hefty 420bp. “These developments suggest that the market is reducing the odds of imminent financial Armageddon, but that significant year-end funding issues remain,” said TJ Marta, strategist at RBC Capital Markets.

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Posted in * Economics, Politics, Credit Markets, Economy, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--