I came across this term.
“Also encouraging is the recent performance of the TED spread – which indicates a thawing in the credit freeze.” – Dollardex, Have we already hit bottom?
What is the TED spread?
Turns out Wikipedia has an entry on it. (What can’t you find on Wikipedia?)
TED spread is difference between the interest rates on interbank loans and short-term U.S. government debt (“T-bills”).
Blank look? Me too.
The spread is a measure of the presumed risk in lending to banks. The wider the spread, the greater the risk. The reason being that if the rate on the loans is getting further from the government loan (debt), people are sensing more risk and thus demanding more interest.
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