Why are overnight funding.....>

GLOBAL MARKET/OPINION: Why are overnight funding markets not spiking but

LIBOR-OIS spiking higher?

- We think there are two main reasons:

1) No one really thinks that any bank is going to go under overnight/over the

weekend. The coronavirus situation is getting worse but we're nowhere near at

that stage yet. However, if you're looking over 1-month or 3-months, we really

don't know how big the economic outlook will be or what the hit to the financial

system will be over that time. If for example, coronavirus spreads across the

US, it will be a few weeks before people stop paying their bills or don't turn

up at work or companies are unable to supply products and get into financial

distress.

2) Central banks have money markets under control at present. But again will

they be able to have a handle on the situation as things get worse in a few

weeks time?

- So in essence, there are concerns that coronavirus can really hit the

financial sector, but it's not going to happen tomorrow.