While mainstream media eyes have been focused on wrecked tech stocks and towering trannies, professionals in the world’s largest liquidity markets have been shocked at the sudden explosion in one chart… that most everyone is hoping is not ‘real’.
With central banks puking money at low or negative rates to anyone who can fog a mirror, the sudden spike in EONIA, or overnight money rates in Europe, which we first highlighted yesterday, is quite a shock in a normally stable market.
EONIA has spiked from -36bps to -24bps in the last 2 days and the authority that ‘manages’ this index has verified this is not a ‘fat finger’.
Traders everywhere are scratching their heads – here’s why:
Bloomberg explains that EONIA is not a posted rate where banks would like to do business, such as Libor, but a weighted average index of actual trading in unsecured overnight money.
This post was published at Zero Hedge on Dec 1, 2017.