What You Can Learn from LIBOR
Obscure Benchmark Can Hold Wealth of Clues; What the Neighbors Think If you’ve ever owned an adjustable-rate mortgage, you might be familiar with LIBOR, the London Interbank Offered Rate. But have you noticed the extra attention this interest rate is attracting? To investors around the world, LIBOR is more than a mere benchmark for short-term interest rates. It’s a proxy for how global markets view the outlook for the U.S. economy. Over There About half of all U.S. adjustable-rate mortgages (ARMs) are tied to LIBOR levels. The behavior of this interest-rate index determines whether ARM payments will rise, fall, or…