Yesterday’s stop losses were triggered in the Euro Swiss LIBOR futures market. After briefly touching 100 on Tuesday (Interest rate futures are priced as 100 – the interest rate, 100 = 0%), the price surged at about 1pm yesterday to as high as 100.20 – representing an implied interbank lending rate of MINUS 0.20%.
Interest rate futures in Swiss Francs have ranged from 98.00 (implying a more normal 2% rate of interest) to yesterday’s highs over the last 2 years.
Interest rate futures are now implying that interbank lending will be below zero for 2 years, with even the June 2013 futures contract being bid above 100, meaning that banks are willing to pay an interest rate to get rid of their cash as far into the future as June 2013.
The mind boggles as to the world the bureaucrats are now moving us towards.