TED Spread Headed for Drop Below 100-Basis-Point Barrier

An important mark of liquidity in the marketplace is fast approaching a drop below the all-important 100-basis-point barrier.

The TED spread, which measures the different between between three-month Treasurys and the three-month Libor rate, is threatening to fall below 100, closing today at 104, a more than 5% contraction since its close last Friday, Jan. 10.

The metric has been an important measure of liquidity -- or lack thereof -- in the market. The TED peaked at 464 on Oct. 10 at the height of the credit crisis, and dipped below the 200-basis-point mark on Oct. 20.

President Bush said during a press conference today that the credit markets were continuing their thaw.