http://online.wsj.com/mdc/public/page/mdc_bonds.html?mod=mdc_topnav_2_3000
The closely watched gap beween the important lending rate 3-month Libor and fed funds rate has been widening. Libor is a short-term borrowing rate used as a benchmark for floating rate debt, from corporate borrowings to ARMs; the rise signals tightening in credit conditions. This usually means the banks see increased risk of loan defaults. Nonetheless, this gap could be one of the factors that may influence the Fed to ease rates further next week.
As of Nov. 30:
Federal-funds rate target: 4.5%
Libor, 3-month: 5.13% (it touched 5.73% in August)
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