Here's How to Gauge Bank-Funding Stress in Europe
Scaroni: European Bank Problems Related to Past, Future
A slew of bad headlines for Deutsche Bank AG pushed short-term bank funding costs higher last week, betraying investor anxiety that stress at the systemically important bank could spill over to other European lenders.
While Deutsche Bank shares had found a firmer footing by Friday's close and analysts have so far struck a relatively sanguine note on the outlook for European-bank funding, these are the charts to watch to see how conditions are developing.
Cross-Currency Basis
While this measure hasn't risen to anywhere near levels seen either during the global financial crisis or at the height of the 2012 sovereign-debt crisis, recent moves in this gauge of European borrowers' dollar-funding costs have been much sharper than usual. The 3-month EUR/USD cross-currency basis traded at minus 60 basis points on Friday, its widest closing level since July 2012. It had eased slightly to minus 55 bps by Monday 6:38 a.m. ET.