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Surging Fed-Cut Bets Spur Biggest Libor Drop Since 2008 Crisis

  • Market now pricing in more than half a point of cuts for March
  • Close to a percentage point of Fed reductions seen by July
Updated on

Money markets are pricing in a half-point cut in U.S. central bank interest rates this month and have baked in about a percentage point of reductions by the end of July.

Bets on easing by the Federal Reserve surged on Monday, while the three-month London interbank offered rate -- a key benchmark for trillions of dollars in financial products -- plunged by the most since 2008. The moves came after central-bank policy makers around the world indicated that they will act as needed to stabilize financial markets in light of the growing coronavirus threat. The yield on the two-year Treasury note headed for its biggest daily drop in more than a decade and fell to a level unseen since 2016.