Chart of The Day – June 18, 2020

By: Chris Wenner in Charts 06/18/2020

The TED spread, which is the 3-month LIBOR rate – the 3-month T-bill interest rate, is thought of and observed as an indicator of perceived credit risk in the economy.  T-bills are considered risk-free while LIBOR reflects the credit risk of lending to banks.  When the TED spread moves sharply higher, it can be a sign that lenders believe counterparty risk is rising.

The TED spread spiked from sub-20 to over 150 in March of this year – and here we are again sub-20.  According to the TED, credit risk is currently very, very low.  Just an interesting observation since our economy is much weaker now vs. the pre-Feb/March selloff; probably reflects the incredible amount of stimulus sloshing around our markets.

CW

 

By: Chris Wenner

Managing Director

Jonathan Molchan

Wennco's innovative strategies and robust OCIO capabilities are designed for RIAs, Family Offices, and high-net-worth individuals.

Follow Us