The Ted Spread

Interesting Ted Spread Chart I picked up from Bloomberg. The TED Spread refers to the difference between the London rate or LIBOR and the 'risk free' 3 month TBill. The spread usually stays around 0.50 or less. When it is in this 0.50 vicinity it means that there is less risk in the system. Currently at around 1.58 it is elevated. It has come down from the 2.4 in August 2007 and the 2.3 in December 2007 and the 2.05 in January 2008 but it still is relatively high. This means that there is still fear in the system and that the credit markets are still under considerable strain. The Fed watches this closely. The topic has popped up a lot since last August due to all of the market turmoil. There was an article in today's Wall Street Journal on this topic.

http://www.bloomberg.com/apps/cbuilder?ticker1=.TEDSP:IND