TED Spread: 3-month LIBOR greater than 2 year treasury yield!

08-24-2011 • The Political Commentator

TED Spread revisited as the yield of 3-month LIBOR and the 2-year US treasury invert! What is the TED Spread? This from The Political Commentator back in July: "As a barometer of the "flight to quality" of funds around the world, the TED Spread is a gauge of investor comfort, panic and the willingness of banks to lend money to each other. The Ted Spread is the difference as quoted in U.S. dollars, between the 3-month treasury bill and the 3-month LIBOR rate. The value of the TED Spread during "normal" times is typically .10 to .50 basis points (currently .24). In other words if the 3-month treasury was 1.1% then the 3-month LIBOR rate would be anywhere from 1.2% to 1.6% (current 3-month rates are much lower). During the height of the 2008 financial crisis, the TED Spread grew to as large as 465 basis points! This meant that using the same hypothetical 1.1% 3-month treasury bill rate, the 3-month LIBOR would have been 5.75%..." Flash forward and instead of the 3-month US