{"id":577122,"date":"2010-05-24T16:53:25","date_gmt":"2010-05-24T20:53:25","guid":{"rendered":"http:\/\/www.businessinsider.com\/ted-spread-blows-past-36-and-pretty-soon-tim-geithner-will-start-getting-nervous-2010-5"},"modified":"2010-05-24T16:53:25","modified_gmt":"2010-05-24T20:53:25","slug":"ted-spread-blows-past-36-and-pretty-soon-tim-geithner-will-start-getting-nervous","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/577122","title":{"rendered":"TED Spread Blows Past 36, And Pretty Soon Tim Geithner Will Start Getting Nervous"},"content":{"rendered":"

The closely-watched Ted Spread, a measure of banking health, widened further today. It’s been a long time since we’ve seen it narrow.<\/p>\n

\"chart\"<\/p>\n

At these levels, we’re still in “safe” territory, but there’s reason to be nervous regardless.<\/p>\n

Remember, the LIBOR is derived by subtracting 3-month LIBOR from risk-free, and the rise of LIBOR creates its own complications.<\/p>\n

Remember, banks have been making a lot of money borrowing cheap and buying Treasuries.<\/p>\n

But if funding costs go up, that trade doesn’t work so well.<\/p>\n

As David Goldman notes<\/a>:<\/p>\n

Only 23 basis points of daylight separate LIBOR (at 51 bps) from 2-year Treasury notes (at 74 bps). Banks are financing roughly two-thirds of the Treasury deficit, and foreign banks are doing most of that<\/p>\n

…<\/p>\n

European banks have massive unrealized losses in government debt markets, and the interbank market freeze is likely to worsen. Whether LIBOR hits the 1.5% level projected by Citibank is beside the point. It only has to creep up to 75 bps for the 2-year-note to get clobbered.<\/p>\n

Join the conversation about this story »<\/a><\/p>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

The closely-watched Ted Spread, a measure of banking health, widened further today. It’s been a long time since we’ve seen it narrow. At these levels, we’re still in “safe” territory, but there’s reason to be nervous regardless. Remember, the LIBOR is derived by subtracting 3-month LIBOR from risk-free, and the rise of LIBOR creates its […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-577122","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/577122","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=577122"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/577122\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=577122"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=577122"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=577122"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}