Bank LTRO Repayment Prospects Stoke Bets Borrowing Costs to Rise
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Speculation that banks will start repaying European Central Bank loans early prompted futures traders to step up bets that borrowing costs will rise as liquidity is drained from the system.
The implied rate on Euribor futures expiring in December rose as much as 18 basis points over the past two days to 0.54 percent, the highest since July 10, according to data compiled by Bloomberg. That’s the biggest jump since the yield started climbing in December, after a 29 basis-point drop in the preceding three months.