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While Trump´s trade war is threatening to escalate (China reacted to Trump´s import tariffs by coming with an own list of import tariffs on U.S. exports, which was quickly followed up by Trump threatening to impose even more tariffs on Chinese imports), we can observe some interesting trends on credit markets. Yes, the yield curve is flattening even further. No, the long-term rate is not on the rise (contrary to what many analysts have been saying for the past three or four years). Yet, this time, I wanted to highlight the TED-spread. This credit market indicator did something rather surprising over the past month.

What Is the TED-Spread?

What Is Happening with the TED-Spread?

The TED-spread since the dotcom bubble. Source: St Louis Fed

The Yield Curve Continues to Flatten

Source: Ferguson-Johnson Wealth Management

Blue curve is the 10-year US Treasury rate, red curve is the 3-month LIBOR in U.S. dollars. Source: St Louis Fed

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