Tightening Spreads Point To Easing Bearishness

--Irene Chapple

The spread between Euribor and Eonia, the European interbank overnight lending rate, tightened dramatically this month, indicating an easing of the extreme bearishness of recent months.

The squeeze of spreads by 30 basis points since the beginning of December—to 136 bps today—shadows earlier moves in the U.S. Libor ...