The ECB cut interest rates by 25bp yesterday (Thursday). There are increasing calls in the US for the Federal Reserve to also lower the Fed Funds rate yet again. Both European and US economies remain feeble and a war against Iraq is on the horizon. For this, and other reasons, swap spreads remain subjected to considerable downward pressure this week. At least in the dollar market, these pressures were compounded this week by a lively new issue market which saw more swap-driven business than in recent weeks.
March 07, 2003