Libor hits a 7-year high ahead of new money fund regulations
A recent uptick in the three-month US dollar Libor appears to be an unintended consequence of soon to be effective SEC money market fund regulations. Approved in 2014, the regulations intended to make structural and operational reforms to address risks of investor runs in money market funds provided for a two-year implementation period. With that period drawing to a close in October of 2016, prime money funds and their investors have been making strategic moves and investment decisions that are having knock-on effects on Libor.