The cost of financing for Bank of America rose warning may disrupt the Federal R
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The recent short-term bank financing costs rose, has caused the market to worry about, if the United States continued high lending rates, may lead to tight financial situation, may reduce the Federal Reserve (fed /FED) to raise interest rates.
Data picture: August 2014, a dollar bill. REUTERS/Siphiwe Sibeko
The three month London interbank lending rate (Libor) rose over the past few weeks, Libor-OIS spreads also expanded. The overnight index swap (OIS) is based on the Federal Reserve policy.
Libor-OIS spreads present high level, only in the past appeared several times, which is on the road in 2016 because of the money market reform measures to significantly reduce bank financial bonds demand in 2011 because of fears that the European banking industry high risk of sovereign debt exposure, 2007-2009 years is due to the financial crisis.
Market participants are trying to clarify whether the rise in Libor interest rate is due to the large increase in short-term government bonds and the decline in demand for bank financial debt, or a new normal.
"The key is whether this is going to last," said George Goncalves, director of American fixed income strategy in Nomura in New York. "If this interest rate does not fall down, I think it will start to affect the investment decision of the bank. If so, it could also cause the fed to raise interest rates less once. "
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