Richard Green is a professor in the Sol Price School of Public Policy and the Marshall School of Business at the University of Southern California.
This blog will feature commentary on the current state of housing, commercial real estate, mortgage finance, and urban development around the world. It may also at times have ruminations about graduate business education.
Thursday, January 15, 2009
Are we calming?
The TED Spread is under 100 bp (just). And my colleague Raphael Bostic points out that intra-day stock price volatility has dropped precipitously. Perhaps soon-to-be- President Obama is soothing us?
Reliance on TED as a indicator of confidence reminds me of the textbook definitions of liquidity a few years ago which turned out to be wrong (at least this decade). The TED spread also strikes me as a perhaps too much relied upon as a confidence litmus. What will happen to this spread and interbank borrowing rates when the market absorbs the enormous Treasury bond issuance in coming years. Nobody can really say. What will the TEd spread being indicating given the profound impact the issuance will cause both here and abroad. Beats me.
Reliance on TED as a indicator of confidence reminds me of the textbook definitions of liquidity a few years ago which turned out to be wrong (at least this decade). The TED spread also strikes me as a perhaps too much relied upon as a confidence litmus. What will happen to this spread and interbank borrowing rates when the market absorbs the enormous Treasury bond issuance in coming years. Nobody can really say. What will the TEd spread being indicating given the profound impact the issuance will cause both here and abroad. Beats me.
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