Strains intensify in money markets | FT Alphaville

Strains intensify in money markets

Strains in the money markets intensified Thursday as key indicators of risk rose to record levels earlier in the day. Analysts warned that the ills in the banking system could still spread to the high street, leading to company defaults and deep recession. In the money markets ,key three-month London interbank rates rose for the third consecutive day as liquidity beyond a week deteriorated further. The TED spread, which compares three-month Treasury yields and three-month dollar Libor, rose to a record 333bp – sharply above last week’s record of 300bp at the height of the Lehman crisis. Later in New York, the TED spread eased to about 300bp as yields on bills rose sharply.