To a large degree, normalcy has returned to the credit markets. The TED spread is ongoing proof of that.
On Wednesday, this widely quoted credit risk indicator fell to a 26-month low. The TED spread is now below its August 2007 levels. (August 2007 is generally viewed as the beginning of the subprime crisis.)
The TED spread is simply the difference between what banks and the U.S. Treasury pay to borrow money for three months. People use it to gauge fear and liquidity constraints in the North American credit market.
The TED spread reached an all-time high of 4.65% at the height of the credit crisis in October 2008. Its long-term average is about 1/2%.
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