Indicators Signal Higher Money-Market Stress Amid Europe Crisis

Money-market forward indicators signaled strains in short-term funding markets increased amid the deteriorating credit conditions of European sovereign borrowers.

Predictions in the forward market for London interbank offered rate-OIS, a gauge of banks’ reluctance to lend, rose to an almost one-week high, according to the so-called FRA/OIS spreads. The forecast by the spread for the three-month period beginning in September, the so-called second rolling contract, reached 40.1 basis points, the highest level since May 24, compared with 37.3 basis points yesterday.