The TED spread is the difference between the interest rates on interbank loans and on short-term U.S. government debt (“T-bills”). TED is an acronym formed from T-Billand ED, the ticker symbol for the Eurodollar futures contract. Most people ignore this indicator day-to-day, because we all just assume the the heart beat of the banking market will keep beating on, but in 2008 everyone was watching it.
Basically the TED spread is the EKG for stress in the worldwide banking system, and right now it’s up over 221% in the last year. When it goes higher, that means banks are growing more & more short of breath to lend to each other. And if bankers can’t trust bankers, who can they trust? So, maybe it’s time to take note again.
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I don't mind you using my post, but I would appreciate attribution...
ReplyDeleteThat is why I put a link to your site at the bottom of the image.
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