Libor Squeeze?

"The current criticism of the LIBOR rate stems from the fact that there isn't volume in unsecured interbank lending these days, meaning that for a lot of LIBOR fixes, they relate to what would be offered instead of what actually was."  - What's In A Spread?

With Basel and LCR, unsecured interbank (FF) lending and repo are virtually dead.  So why is LIBOR screaming?  "Deposits" are being utilized, think excess reserves, IOER, and who has what parked at the Fed and how. Think ON RR services, SPV's, balance sheet capacity, the FOMC balance sheet runoff, and Treasury balances.

Above, the USD tracking Fed balances, more balances, less dollar float, higher dollar and vice versa.

"Credit spreads moved wider by 20 basis points since the last update. This is another puzzling development, as I would have expected spreads to narrow as stocks recovered. Since the stock market peak on 1/26, spreads have widened by 50 basis points, a change of 15%. Most markets seem to be pointing toward some kind of slowdown, whether the Fed recognizes it or not." - Joe Calhoun

Indeed, despite the massive hurricane based inflation hysteria, a slowdown coming and no mystery if one knows a debit from a credit. Which the ReBOPS at the Eccles Bldg are "seemingly" oblivious to viz. necessary symmetry on the asset side. Watch FX swaps, repo, CP and CD as other spread metrics widen while cost of short term loan funds increases.

Above, Libor escalating since Dec 2015, and jumping the tracks in 2017, think about what changed. Again think Basel, LCR, MMF, and deposits or reserves. 

Meanwhile... since Q42014 profits have not grown, while equities +25%. Since 2011 profits have grown 8%, which is a whole 1.3% annual, while equities +82%. Value or distortion? Fun house mirrors come to mind.

Are those ReBOPS really oblivious? Or is this all by design?  In the meantime, an inversion is not necessary at this point, as "they" may have lost control. 

What's that sound? Even black holes emit one, and I can feel it coming in the air tonight... More to come in Libor and Reserves?, stay tuned, no flippin.