What happens to your loan when LIBOR goes away?

Lòrdèss Mãggìë II

20 min

Business & Finance

Description

Jobs, tapering driving markets and rates Jobs and tapering are the key elements driving the markets right now. All eyes will be on Friday’s employment report, which will definitely impact the markets. If employment numbers are strong, this will lead to higher Treasury numbers. There’s been some volatility in the Treasury market. The last two weeks trading range has been from a low of 1.3 percent, to about 1.54, so up almost 25 basis points. “I expect to see a slow upward trend,” observes Thirty Capital Analyst Bryan Kern. “I’m expecting the range to be around 1.60 or maybe even as high as 1.65 for the next two weeks.” Bryan reminds listeners that tapering is expected to begin next month. On the one-month BSBY and one-month term SOFR, both are trading at around six basis points. One-month LIBOR continues to trade a couple of basis points higher, close to eight basis points. Analyst Jay Saunders says rates will likely remain where they are until the Fed is through with its tapering. He notes that a single Fed rate increase is predicted for next year, 2022, with two increases anticipated for 2023. Jay says even with inflation, the short end of the curve is not moving upwards at all. He advises that if borrowers have caps or shorter-term hedges, watch them very closely. The CMBS-CLO market is as hot as ever, Analyst Jeff Lee reports. “We are in that 45 to 60-day window now, before year end, when a securitization starts” he explains, adding that good pricing is available. “A lot of l

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