Bank funding costs fall with ECBQE

Advertisement

I keep a regular eye on the major Australian banks wholesale funding costs as guide to how markets are perceiving Australian risk. Since mid last year we have seen a rising trend which pitched sharply upwards as Grexit concerns took centre stage.

But the last week and more has seen those concerns evaporate and we can see the result in the CBA CDS price (a proxy for funding costs) which has dropped 20bps since the January high at 76bps to 56bps yesterday:

Capture

The question now is well they keep falling a resume post-Draghi downtrend, especially as European QE gets underway buying bonds that virtually don’t even exist.

Advertisement

The full text of this article is available to MacroBusiness subscribers

$1 for your first month, then:
Cancel at any time through our billing provider, Stripe
About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.