Apparently, the persistent resistance to narrowing of the Libor:OIS spread since 12 November is all about year-end funding according to this Bloomberg report.

That's great news! No need to worry about diminishing returns of the various liquidity "facilities" (note to self, check the definition of that word): the Primary Dealer Credit Facility; the Asset-Backed Commercial Paper Money Market Fund Liquidity Facility; the Term Securities Lending Facility etc etc.

So, rest easy, for the slight widening of the spread over the last month will be reversed by Christmas when banks will, perhaps, gift taxpayers some more of their precious assets.

UPDATE, 3 December - Just off DJ Newswires (excerpt only):

"The cost of borrowing longer-term U.S. dollars in the interbank market fell Wednesday after the Federal Reserve announced it would extend the terms of three of its recently implemented emergency liquidity facilities in light of the ongoing strains in financial markets.

The Fed said its Primary Dealer Credit Facility (PDFC), the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF) and the Term Securities Lending Facility (TSLF) would run until the end of April 2009."

Here's wishing for the programmes' (continued) success.

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