How the Rising Libor Rate May Impact the Fed and Bonds

The video discusses the potential impact of Federal Reserve rate hikes and the rising Libor rate, which is influenced by money market reforms. These changes affect credit markets, borrowing costs, and adjustable mortgages. Despite concerns, the changes are seen as incremental and not indicative of market stress. Experts predict that interest rates, when they rise, may do so rapidly, impacting both short-term and long-term borrowing. The discussion includes varying opinions on future interest rate movements and their implications for the market.

What has caused the recent rise in the Libor rate?

• A systemic financial crisis

• Changes in money market reforms

• Increased government spending

• A decrease in global trade

How does the rise in the Libor rate affect adjustable mortgages?

• It stabilizes the market

• It increases the borrowing costs

• It has no effect

• It decreases the interest rates

What is the main reason for the increase in borrowing costs for individual credit borrowers?

• A financial crisis

• Unintended consequences of money market changes

• Government intervention

• Decreased demand for loans

What did Alan Greenspan suggest about future interest rate movements?

• They will increase rapidly

• They will decrease slowly

• They will remain stable

• They will not change

What is the potential impact of rapid interest rate changes on the market?

• It will decrease borrowing costs

• It will have no impact

• It will stabilize the market

• It will surprise with its speed