Matt King: This Is The Real Reason Behind The Blow Out In Libor-OIS

Two weeks ago when discussingthe ongoing blow out in Libor, which today again rose to 2.3246%, up 0.38% on the day, the highest since November 2008 and higher for the 39th consecutive day, the longest streak since November 2005,we said that contrary to the generally accepted theory that "all is well", and that the move is purely technical as a result of a glut in T-Bill supply and cash repatriation, the real reason behind the Libor has to do with an overall dollar funding shortage and generally tighter financial conditions, which was also observed in the sharp move wider in bank CDS.