Nice chart via my fishing buddy, John Silvia, who notes:

In its statement, the Federal Open Market Committee suggested that recent policy actions should help over time to improve credit conditions. Financial markets have evidenced some very modest improvement in credit spreads, but the search for that new equilibrium between risk and reward remains in progress. For example, both the price and the availability of credit to the high grade and high yield bond markets have assumed a very different tone from earlier in this decade. Meanwhile, the TED spread widened to over 400 basis points and has now retreated below 300 basis points (Figure 3). Commercial paper issuance has increased especially for commercial paper maturities over 81 days. The market and the economy remain constrained by the paradox of lemons—make more lemonade. This process will take time and supports continued Fed easing at the short end of the curve and credit aversion in the private market.

TED Spread

Source: Federal Reserve Board and Wachovia

Category: Uncategorized

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

15 Responses to “Ted Spread Improves”

  1. donna says:

    Great new look, very clean! Love it!

  2. jdmckay says:

    Hey Barry…

    OT: big improvement w/this website IMO. I’m a coder, web stuff amongst my resume… this is what such an informational site should look like. Uncluttered, minimum attention diffusion, clean simple & easy to navigate.

    Kudos to you and your page designers whoever they may be… or are you the WordPress guy too?

  3. me says:

    Congratulations on the new site layout. Looks smart. Navigation is great. The only thing I was wondering about is tags – I don’t see any.

  4. DavidB says:

    Site has grown on me already. It looks much better in ‘real time’. Good instinct

  5. Carlos says:

    Great new layout, only thing i don’t like is the huge banner at the top. It takes up way too much space. Except for that its great.

  6. John bruso says:

    Carlos,

    I agree about the top banner. It’s slick, but I think the same effect could be achieved at 40% of the size.

    The banner is 280 pixels high… I think it could easily go to 140 and still be effective.

    :) John

  7. rob says:

    I also like the new look, much cleaner, easy on the eyes.

  8. Clay Ward says:

    Barry,

    Great job on this new web site. I just took a brief tour. It is excellent including your content, as always.
    Please know you are much appreciated.
    Kindest regards,
    Clay

  9. SeekingAlpha says:

    We love it and will copy it shortly!

  10. Mind says:

    Very positive changes. However, I agree that the graphics on the top will soon become extraneous and will mean nothing to repeat visitors – are they dynamic? If not, you might consider making them dynamic – i.e., change the graphics throughout the week and/or day from a database of timely, interesting images – think what you could do – you could have “themes”, etc. Otherwise…

  11. Sid says:

    TED spread coming in is quite significant

  12. gdm says:

    The TED coming in is in fact extremely significant. There are a couple of caveats, however:

    (1) At 2.6447% today TED is down a bunch from 4.4687% on 10/10 but it is above the trough of 2.5617% on 10/22 (this graph looks to be from 10/23 when it first ticked up, going up to 2.8722% yesterday before retreating a bit today).

    (2) Libor is a fiction. ICAP’s 3-month NY Funding Rate is slightly better, and the TED using NYFR looks slightly worse: 2.8472% today vs trough of 2.6897 on 10/23 and peak of 4.5464% on 10/10.

    (3) TED, no matter how measured, is MUCH higher than it normally would be, indicating stresses, though reduced, are still very high. We are still well above where we were before LEH went bust (1.3444% on 9/12 using Libor) and an average of 6-25bps from 2000-2006.

    (4) The equivalent TED for corporates (spread of BBB Insustrials to 10-yr Treasuries) is still very high. It reached its peak yesterday (so far) at 4.1669% and is down slightly at 4.0783% today, but that’s up from 3.5158% on 10/10 when the interbank spreads were peaking (and 1.3% before credit crisis hit).

    Point 4 is what worries me the most: only those markets where the Fed/Treasury has directly intervened in have shown improvement. Yes interbank lending (now guaranteed) is better and commercial paper (now bought by Fed) ticked up some, but in areas where the government hasn’t yet stepped in (corporate bonds, equities, home prices, commodity prices) we are still seeing the impact of deleveraging, pessimism, downward revisions to expectations, and extreme risk aversion.

  13. Benjamin Walthrop says:

    With CBs (particularly the Federal Reserve) embracing their role of lender of last resort to the extent that they may now be the lender of first, last, and only resort is the TED spread really a reliable measure of credit liquidity anymore?

  14. johnny says:

    I imagine it’s a reliable measure of possible bank failure though it looks to be a trailing. With all of the fed intervention, bets on some big headline failures is a losing trade. Need to wait until this fit of pessimism abates and people become too cavalier. Actually all markets/indices are trailing indicators.

    Lets see if TBP lets me post.

  15. Mark E Hoffer says:

    OT: as others, above, have stated: “new site off to a good jump” , and I was just thinking to myself: “this place is much more chill..”, a major +
    ~~

    The LIBOR fixation is, simply, just a another distraction..though, It’s (not) funny that these posts (on major Market internals) get so little traffic v. the poli-sci-fi ‘ink blots’, like “Adam Smith was a Socialist”.

    Talk about “Programmed to Receive”…