March 15, 2018

DOLLAR FUNDING & US TREASURY FX HEDGING COSTS BEING IMPERILED! The ongoing blow out in Libor-OIS is having defined and adverse consequences on both dollar funding and hedging costs. This alone will have a severe impact on foreign banks, because as DB wrote recently, “the rise in dollar funding costs will damage the profitability of hedged investing […]

THERE ARE CLEAR PROBLEMS (SOMEWHERE) IN THE GLOBAL CREDIT MARKETS! The expansion of the LIBOR-OIS and Basis Swaps have been impacted by a complex array of factors, which include: An increase in short-term bond (T-bill) issuance Rising outflow pressures on dollar deposits in the US owing to rising short-term rates Repatriation to cope with US […]