For a while there, everyone was obsessed with the TED spread — the difference between yields on T-Bills and interbank loans — as the key indicator of credit conditions. Well that story has quieted down, and the massive influx of government cash has slowly narrowed the spread.
Calulated Risk calls attention to the fact that it’s now below 1, having hit a stunning peak of 4.63% post-Lehman. It had stubbornly stayed above 2 for some time after the government intervened. Other related spreads are contracting similarly.
For more discussion of the credit thaw, James Hamilton at EconBrowser has a good discussion of what the numbers mean.