Update on the Interest Spreads

Here is an updated chart of the interest spreads. They were discussed in more detail in this earlier post.

The spread between Moody's Baa to the 10 year Treasury and the TED Spread are still at high levels indicating that the credit crunch still remains.

The S & P 500 has droppped over 20% in a one year time frame just 5 times since 1971 (in 1973, 1981, 1982, 1987, and 2001). The TED Spread was over 1.2% less than 3 months before the peak was reached in each of those 5 times. There many times where the TED Spread doesn't reach this level for years at a time. The S&P 500 is currently down 15.8% from the most recent high reached in October 2007. The TED Spread was at an elevated level this time around as well.

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