Positive news is Banks are lending each other. Ted Spread tightens. The spread has been decreasing today and traders are taking it as a sign the credit market is in the process of unclogging and are buying equities in the hopes that corporate liquidity concerns will ease.
Also there has been no negative news this weekend has helped the stock market and high yielding currencies recover. The liquidity that central banks have pumped into the financial markets are also finally having an effect on the credit markets. As indicated by the table below, everything from 3 month LIBOR spreads to the TED spread and currency volatilities have fallen since Friday and most of these indexes are down sharply from last Monday. This shift indicates that banks and other counterparties are becoming less risk averse and more willing to lend to each other which is helping equities and carry trades rally.
Also there has been no negative news this weekend has helped the stock market and high yielding currencies recover. The liquidity that central banks have pumped into the financial markets are also finally having an effect on the credit markets. As indicated by the table below, everything from 3 month LIBOR spreads to the TED spread and currency volatilities have fallen since Friday and most of these indexes are down sharply from last Monday. This shift indicates that banks and other counterparties are becoming less risk averse and more willing to lend to each other which is helping equities and carry trades rally.
http://www.nytimes.com/interactive/2008/10/08/business/economy/20081008-credit-chart-graphic.html
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