The TED Spread

The bond market is now showing the first major sign of an impending recession. It is called the TED Spread. It is a short-term indicator.

TED Spread is the Treasury-EuroDollar Spread. It measures the difference between the 3-month yields on both the bills. It increases during economic or financial crises.

The TED Spread is currently above 210 basis points, which is particularly high and reflects reluctance among banks to lend money to each other. This could choke the economy and lead to recession.

Tomorrow... the second sign...