Quantcast

Jim Letourneau's Blog

Investing, Technology, Travel, Geology, Music, Golf. I think that covers it.

What is a TED Spread?

Frank Holmes at US Global Investors explains what the TED spread is . Historically it wasn't a very interesting parameter because it didn't change much, however we are living in interesting times. Frank summarizes it nicely below.



Graph from Wikipedia

The TED spread is the difference between the interest rate that banks charge each other for short-term loans in the London money market (the 3-month LIBOR ) and the interest rate of the 3-month Treasury bill . When the TED spread widens, it means the market sees a rising risk that banks won’t be able to repay their loans.

Click here to to see a current TED Spread graph.