Market Information Friday, October 16, 2015

US Treasury Secretary Jack Lew warned the American government that it will hit its legal debt limit by November 3rd 2015. Currently the government debt is close to the limit of USD 18 trillion. Lew has asked Congress to increase the limit. In 2011 and 2013, the government debt was also close to its limit, almost causing the US Treasury to miss payments.

According to Reuters, the Federal Reserve (Fed) is still expected to raise interest rates in December 2015. However, recent developments in the labour market reduce confidence that the Fed will ‘pull the trigger’. The average monthly job growth in August and September of 139,000 was the lowest in the past 18 months. According to Reuters financial markets are pricing in a 1 in 3 chance of a rate hike this December.

Yesterday, the court of Zeeland-West-Brabant decided that Rabobank has to pay compensation for the losses that food company King Cuisine realised on interest rate derivatives. According to the court, Rabobank has not fulfilled its duty of care. King Cuisine entered into the swaps to fix its interest payments. When the company was sold a few years later, the derivatives had to be unwound with losses. The court’s judgement could become an example for similar cases.

The 6M Euribor remained unchanged at 0.03%. The 10Y Swap remained unchanged at 0.93%.

In the attachment below, today’s market data on money and capital market rates as well as other rates are presented. For more history of these rates or other rates feel free to ask: