Spreads Are Starting To Behave

CHICAGO (Dow Jones)--Interest rate spreads must come back to historic levels before stability returns to CME Group Inc.'s (CME) interest rate futures complex, and there are indications this may be happening, a senior executive said Tuesday. - Moderation in key interest rates is also critical to the stabilization of the overall global economy, according to Rick Redding, managing director of products and services for CME. - There are signs of progress in recent days, Redding said, as the spread between the federal funds rate and the London interbank offered rate have reached 90 to 95 basis points, down from around 450 basis points in the aftermath of the Lehman Brothers bankruptcy filing last fall. - A basis point is one-one hundredth of a percentage point. - Redding also noted that deals are now getting done in the corporate debt market, another hopeful signal. - "We're not willing to say we see stability yet, but these are the first signs we've seen," Redding said, speaking at the Citi Investment Research 2009 Financial Services Conference. - Trading in CME's interest rate futures products, accounting for about 60% of CME volume and a major driver of the exchange's growth in the past, fell 12% in 2008. - Overall CME volume rose 4% in 2008, as gains in equity index, foreign exchange and commodity products helped offset the decline in interest rate futures trading. - Redding said it was the first year in CME's history that interest rate futures trading declined while overall volume increased. - CME shares were up at $171.80 Tuesday morning, after closing at $166.58 Monday. -By Jacob Bunge, Dow Jones Newswires; (312) 750 4117; jacob.bunge@dowjones.com Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=hZAZzwOP9uNFDVPLYpnI%2FA%3D%3D. You can use this link on the day this article is published and the following day. (END) Dow Jones Newswires January 27, 2009 09:42 ET (14:42 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 09 42 AM EST 01-27-09