Libor-OIS Spread and the Derivatives Time Bomb.

In this report I cover the early market action from London on Wednesday, April 4th, 2018. I look at stocks, precious metals, bonds and the dollar.

I also discuss the Libor and OIS rates and the spread between the two rates and what it means. I explain the difference between exchange traded derivatives and the OTC or over-the-counter derivatives. I look back at the history of derivatives and how this market was the trigger for the 2008 crisis and how it could end up being the trigger for the next crisis.

I note that the central banks and the too-big-to-fail banks are heavily involved in setting the Libor (London Interbank Offered Rate) and how they were caught red handed by regulators and fined. Even though there is proof the Bank of England pushed banks to manipulate Libor nothing has been done to reprimand or punish the institution.

Recently the LIbor/OIS spread, a barometer of banks' financial stability, has been spiking higher and that means banks are starting to not trust each other again just like in 2007/2008.

"Libor-OIS Is Ready to Tighten. Consider It Merely a Reprieve": https://www.bloomberg.com/news/articles/2018-04-02/libor-ois-is-ready-to-tighten-consider-it-merely-a-reprieve