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E-o-n-i-a

(To be sang a la Patti Smith)

Look here, it’s eonia back to record lows:

image

And look here, some randomish thoughts, in no particular order, on what might be causing it:

  1. There’s a higher probability of an ECB rate cut priced in — see negative rate (bluffs) for more.
  2. The mix of banks participating in eonia has ‘improved’ again. Although it seems unlikely it ever got particularly good.
  3. Everyone now thinks excess liquidity will be hanging out well above critical levels. JP Morgan, for example now see it reaching around €250bn by end-2013 from around €500bn. MRO access ticking up may have something to do with that.
  4. Moves at this level are basically just noise anyway and should be broadly ignored.
  5. Something else.

(David)