| Distortions are occurring in collateralised funding and swap markets meaning secured funding is weirdly costlier than unsecured. Bankers are blaming post-crisis leverage ratio regulation for the anomaly. But what really does the aberration in the collateralised Fed-funds spread reflect?
Credit Suisse’s FI team puts it relatively simply this Thursday: it’s all about the cost of balance-sheet rental, which is now as scarce a commodity as oil: Not only have intermediating dealers not yet fully priced in balance sheet costs, but we also expect that they won’t do so in the near future as well...............................................Full Article: Source
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