4 Comments
 

You're competing against central bank ZIRP (and their discount windows)?

The banks are also flush with cheap capital so they'd have no problem lending it out for virtually nothing. No risk. You can always borrow more from the CB! Which means that your counterparty will surely pay you back because they can borrow cheap as well. Welcome to cheap money.

 

Another feature is demand for funding - interest rates (and specifically libor) represent demand for money. Demand for money is at an all time low - people doubt economic recovery in the near future so they're not expanding etc. (since the probability of any such expansion failing is high).

 

I knew demand had a lot to do with it, but I didnt think it would get THIS low. I figured 23 maybe 22 bps would be as low as it would get.

I know if you could predict what interest rates would do you would be a millionaire, but anyone know of any articles on what LIBOR is forecasted to do?

It is what it is
 

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