Bond Outlook [by bridport & cie, January 9th 2008]
What is our own answer to our end-of-year question on whether a massive loosening of liquidity can solve a solvency problem? Basically that the operation has worked in the sense that Libor and government bond yields have now moved much closer to each other. The action of the central banks was therefore a wise and necessary action. However, whilst liquidity has improved in the inter-bank market, it would be a big leap to say that the economy is out of the woods. |
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