Note: This post is from April 2008 but is updated from time to time to reflect charts of the current market conditions
The TED spread is a common measure of fear and risk in the capital markets. Judging from where the TED spread is now (see chart below), there's a lot of fear and risk to go around.
Updated chart for June 2010:
The TED spread measures the gap between the interest rate at which the U.S. Treasury funds itself (3-month T-bills) and the interest rate at which banks lend to each other (3-month LIBOR: London Interbank Offered Rate). And one can see from the Bloomberg chart that risk is rampant in the global capital markets. In fact, it has been increasing since the Bear Stearns debacle.
On the other hand, last week, the U.S. stock market rallied as if everythin...
As this site is now reader-supported via Patreon, the remainder of this article is only available to subscribers at a specific patronage level. Articles at patronage levels BRONZE, SILVER, and GOLD are denoted by the categories in blue capital letters above the post. Posts categorized DAILY are available to both SILVER and GOLD patrons.
Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.