Zero Hedge
0
All posts from Zero Hedge
Zero Hedge in Zero Hedge,

Interbank Credit Risk Is Rising Ominously Again In America

We have been anxiously reminding investors of the drip-drip-drip increases in market-perceived credit risk for US financials for much of 2015. Having risen to almost 90bps amid the chaos of 2 weeks ago (almost double the lowest levels post-Lehman hit in June of last year), it appears systemic counterparty risk is very much on the rise. What is more concerning however, as Alhambra's Jeffrey Snider notes, the TED spread has exploded higher (since China's devaluation) indicating, as convention has it, a marked increase in perceptions of interbank credit risk.

"Credit" risk perceptions have risen rapidly...

 

And now the ominous TED Spread is flashing warning signals about the US Financial system...

 

As Alhambra's Jeffrey Snider notes:

With t-bills settled down again (another clue as to how disruptive the “dollar” run became at its worst), the TED spread has exploded higher indicating, as convention, a marked increase in at least perceptions of interbank credit risk.

 

The TED spread now is where it was in the weeks just following the flash crash (Greece/euro) in later May 2010, and equal to October 2011 after the SNB pegged to the euro and the Fed reproduced dollar swaps globally.

 

This is significant and seems to be underappreciated everywhere but places like VIX (and especially longer VIX futures).

*  *  *

Despite some modest amelioration in the last week - after massive seemingly coordinated intervention, perhaps, investors will start paying attention now.