Investor Glossary-ted spreadInvestor Glossary-ted spreadInvestor Glossary-ted spreadInvestor Glossary-ted spreadInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

TED Spread

The HTML to link to this page
 

A TED spread is a yield spread. On any given day, the TED spread represents the difference between the interest rate of a three-month US Treasury Bill (i.e. "T" in TED spread) and the settlement value of a three-month Eurodollar future (i.e. "ED" in TED spread). TED spread is simply calculated as the difference between the three-month US Treasury Bill and three-month LIBOR (i.e. London Inter Bank Offered Rate). A spiking TED spread suggests increasing counterparty risk in the financial markets. When inter-bank lenders are concerned about potential defaults by other banks, the LIBOR increases causing the TED spread to increase as well. For example, during the banking crisis in 2008, the TED spread shot up to more than 450 basis points. Prior to the crisis, the TED spread tended to stay between 20 to 60 basis points. The TED spread is expressed in basis points (i.e. bps). A TED spread of 100 basis points for example means that there is a 1% difference between the three-month T-Bill and three-month LIBOR.



Rate this TED Spread definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: labor relations, 1031 exchange, wholly-owned subsidiary, margin rate, debt service coverage, phantom income, risk management, ex-dividend date, retained earnings, reverse mortgage, minority interest, required rate of return, FICO score, quality assurance, diluted share, open position, inflation, covered put, stock split, in escrow, cancelled check, real GDP, dividends payable, APR, liquidity ratio, FTSE, balance sheet, 1035 exchange, EBITDA, irrevocable trust, Key Rate Duration, ex-dividend, deferred tax, VIX, option premium, average price per share, implied volatility, current ratio, limit order, deferred revenue, per diem, Zero Cost Collar, annual return, 401a, stock market close, command economy, LIBOR, 144a, class C shares


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2015 Investor Glossary - All rights reserved - Terms of Use