AIG has come under fresh pressure this morning with the stock price of what was once the world’s largest insurer now at $2.75. Libor is rising across the board, the rate at which banks lend to one another, as institutions do everything they can to harbor liquidity. Against that backdrop, a rate cut from the Fed would not be surprising. They have traditionally responded to financial crises by cutting rates and this, my friends, is a crisis. TSLF and the alphabet soup of lending facilities put in place by the Fed in recent months take care of Wall Street to some extent, but they need to do something to reassure Main Street at this juncture.
EUR/JPY shed support at 147.50 a short while ago and is emblematic of a market looking to reduce risk to the maximum extent.
