Time 9:17

Market Comments:

Libor surges after scrutiny does, too - WSJ
The Wall Street Journal reports Libor took its largest jump since the advent of the credit crisis in a sign that banks could be responding to increasing concerns that the rate doesn't reflect their actual borrowing costs. Thursday's sudden jump in Libor comes after a decision Wednesday by the British Bankers' Association to speed up an inquiry into the daily borrowing rates that banks provide to establish the Libor rate. The move by the BBA, which oversees Libor, came amid concerns among bankers that their rivals were not reporting the high rates they were paying for short-term loans for fear of appearing desperate for cash. In a note to clients Thursday, UBS AG strategist William O'Donnell suggested that banks were responding to the heightened scrutiny, saying that the BBA's announcement of its inquiry was an attempt "to bring publicly posted rates back into line with the shadow interbank money rate market." If sustained, the jump could mean higher debt payments for homeowners, companies and others. Some expect Libor to increase further. William Porter, credit strategist at Credit Suisse, said he believes the three-month dollar rate is 0.4 percentage point below where it should be. That echoes the view of Scott Peng, a Citigroup analyst who said that Libor understated banks' true borrowing costs by as much as 0.3 percentage points.