, Columnist
Refusing Free Money Is a Sign of Fear
A vital indicator of a dollar squeeze is flashing red. It means trouble for banks.
Back to the currency markets.
Photographer: David Cairns/Daily Express/Getty Images
This article is for subscribers only.
Fear is when you want to pick up the shiny nickel lying in the road, but freeze at the sound of the approaching steamroller. The currency market equivalent of this is a widening basis swap — free money that banks are too scared to pocket. For the fourth time in the past decade, the fear gauge is starting to go wild.
Don’t ignore the warning, particularly in South Korea, a reliable indicator of trouble in the past. What’s happening in an esoteric corner of currency markets will also shape banking trends.