Another credit market indicator, the “TED spread,” rose to yet another record high of 3.68 percentage points. The higher the spread, the more likely banks are to avoid risk. The TED spread was only 1.04 points on Sept. 5.
The TED spread measures the difference between 3-month Libor and the yield on the 3-month Treasury, considered by many investors to be the safest investment. The spread is a key indicator of banks’ willingness to lend to one another.
Libor is the acronym for London interbank offered rate, another key indicator of interest rates.