The TED Spread Is Dead… Again

The TED spread is something a lot of people were seemingly worried about a few months ago – at least that bearish crowd that provide the public service of perpetual warnings about stocks and such.

You wont hear them anymore, by contrast, saying how good things are now that the TED spread has fallen to the low end of the range.  Indeed, the comments that “the Ted spread is dead” come to mind.  It goes to show that you need to take the various internet commenters with a grain of salt (indeed, even this one!).

Similarly bank Credit Default Swaps (CDS) were also apparently a harbinger of the end times, yet from the highs they have contracted. It again is a cautionary tale. Those who bring the warnings, the reminders of what happened during the big bad crisis, are not always as smart as they make out to be. They may get 100 retweets and their quotes may attract a lot of viewers, but the ones who actually make money are those who stay sober enough and look through the sensationalism. Afterall it’s not when CDS or TED or VIX are high that is the most risky of times… often it’s the opposite!

The attempted resurrection of the TED spread in late 2016 failed. The Ted spread is dead again.

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TED Spread Chart


European bank CDS were supposed to be an omen of the end times but have fallen back to the lows; converging toward the even lower CDS premia for US banks.

CDS – Europe vs United States Chart


For more of my macro analysis, visit Top Down Charts.  Thanks for reading.


Twitter:  @Callum_Thomas

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.