Libor Plunges Most Since 2008 After Virus Spurs Bets on Fed Cuts

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(Bloomberg) --

One of the world’s most important borrowing benchmarks on Friday staged its biggest one-day drop in more than a decade.

The three-month London interbank offered rate for dollars -- a benchmark for trillions of dollars in financial products globally -- sank 11.8 basis points to 1.46275%. That’s the biggest one-day slide since December 2008 at the height of the global financial crisis. The move Friday reflects a market that’s pricing a more aggressive pace of monetary-policy easing from the U.S. central bank to cope with the economic impact of the coronavirus.

Libor Plunges Most Since 2008 After Virus Spurs Bets on Fed Cuts

Futures traders are pricing in close to 94 basis points of Federal Reserve interest-rate cuts in 2020. That’s the equivalent of more than three standard quarter point cuts, and the first of these is almost fully priced in for as soon as March. A week ago, the market was pricing in just 48 basis points by year-end, but traders have amped up bets drastically this week as virus concerns have battered stocks around the world and sent investors rushing into haven assets.

Related Story: Treasuries Lead Global Bond Rally in Frenzied Hunt for Safety

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