The TED spread—a leading indicator of general credit risk in the economy—is blowing out, surpassing levels it saw last time Greece almost defaulted in 2010.
The difference between the 3-month LIBOR (interest rates banks charge to borrow dollars in London) and the interest rates on U.S. treasury bills topped 49.08 basis points today, beating its 48.63 high in June 2010.
These levels are nowhere near what we saw during the financial crisis, when the TED spread topped 450 as Lehman and Bear Stearns were collapsing. But it does suggests that credit risk is at its highest levels since the financial crisis started winding down in June 2009.
Check out the TED spread over the last 3 years:
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