World to face stress test as dollar LIBOR spikes and bond rout deepens

Section:

By Ambrose Evans-Pritchard
The Telegraph, London
Sunday, October 30, 2016

Surging rates on dollar LIBOR contracts are rapidly tightening conditions across large parts of the global economy, incubating stress in the credit markets and ultimately threatening overvalued bourses.

Three-month LIBOR rates -- the benchmark cost of short-term borrowing for the international system -- have tripled this year to 0.88 percent as inflation worries mount.

Fear that the US Federal Reserve may have to raise rates uncomfortably fast is leading to an increasingly acute dollar shortage, draining global liquidity.

"The LIBOR rate is one of the few instruments left that still moves freely and is priced by market forces. It is effectively telling us that that the Fed is already two hikes behind the curve," said Steen Jakobsen from Saxo Bank. ...

... For the remainder of the report:

http://www.telegraph.co.uk/business/2016/10/30/world-to-face-stress-test...



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