Libor-OIS Spread Falls to Levels Greenspan Said is "Normal"
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The Libor-OIS spread dropped 1 basis point to 25 basis points today, the lowest since Jan 24, 2008 and the level former Federal Reserve Chairman Alan Greenspan called "normal," according to a report from Bloomberg.
The data is further evidence that the credit freeze is thawing.
The Libor-OIS spread measures the premium banks charge over what traders predict the Fed's daily effective federal fund rate with average over the next three months. It averaged 11 basis points in the five years leading up to August 2007, when the credit crisis started in earnest.
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