Ted Spread

What is 'Ted Spread'

Ted spread is the price difference between three-month futures contracts for U.S. Treasuries and three-month contracts for Eurodollars having identical expiration months.

BREAKING DOWN 'Ted Spread'

The Ted spread can be used as an indicator of credit risk. This is because U.S. T-bills are considered risk free while the rate associated with the Eurodollar futures is thought to reflect the credit ratings of corporate borrowers. As the Ted spread increases, default risk is considered to be increasing, and investors will have a preference for safe investments. As the spread decreases, the default risk is considered to be decreasing.

RELATED TERMS
  1. Eurodollar Bond

    A U.S.-dollar denominated bond issued by an overseas company ...
  2. Eurodollar

    U.S.-dollar denominated deposits at foreign banks or foreign ...
  3. Credit Spread Option

    A financial derivative contract that transfers credit risk from ...
  4. Five Against Note Spread - FAN

    A spread in the futures markets created by taking offsetting ...
  5. Spread Indicator

    An indicator that shows the difference between the bid and ask ...
  6. Note Against Bond Spread - NOB

    A spread within futures contracts created by offsetting positions ...
Related Articles
  1. Retirement

    Money Market: Eurodollars

    Contrary to the name, eurodollars have very little to do with the euro or European countries. Eurodollars are U.S.-dollar denominated deposits at banks outside of the United States. This market ...
  2. Professionals

    Spreading

    Spreading
  3. Professionals

    Summary And Review

    Summary And Review
  4. Professionals

    Other Types of Derivatives

    CFA Level 1 - Other Types of Derivatives. Learn four other types of derivative contracts, including the characteristics of Eurodollar futures, currency and stock index contracts.
  5. Professionals

    Summary And Review

    Summary And Review
  6. Options & Futures

    Option Spreads: Tips And Things To Consider

    By John Summa, CTA, PhD, Founder of OptionsNerd.comNow that you have obtained a solid foundation for underlying option spreads, here are some tips on how to use them. In this section, we'll ...
  7. Options & Futures

    Trading Calendar Spreads In Grain Markets

    Futures investors flock to spreads because they hold true to fundamental market factors.
  8. Bonds & Fixed Income

    5 Signs Of A Credit Crisis

    These indicators can illuminate the depth and severity of problems in the credit markets.
  9. Professionals

    Spread Trading

    Spread Trading
  10. Professionals

    Intermarket vs. Intramarket Sector Spreads

    CFA Level 1 - Intermarket vs. Intramarket Sector Spreads. Learn the various sectors that make up the bond market and how they relate to yield spreads. Also relates credit spreads to economic ...
RELATED FAQS
  1. In what types of financial situations would credit spread risk be applied instead ...

    Find out when credit risk is realized as spread risk and when it is realized as default risk, and learn why market participants ... Read Answer >>
  2. What are some examples of financial spread betting?

    Learn how financial spread betting is done, and see examples of some of the ways that investors can use spread betting as ... Read Answer >>
  3. How do I set a strike price in an options spread?

    Find out more about option spread strategies, and how to set the strike prices for bull call spreads and bull put spreads ... Read Answer >>
  4. What's the difference between a credit spread and a debt spread?

    Learn about debit and credit option spread strategies, how these strategies are used, and the differences between debit spreads ... Read Answer >>
  5. What are the most popular and useful measures of credit spread?

    Learn about the different types of credit spread measures that measure risk, including the zero-volatility spread and the ... Read Answer >>
  6. What types of stocks have a large difference between bid and ask prices?

    Find out which factors influence bid-ask spread width. Learn why some stocks have large spreads between bid and ask prices, ... Read Answer >>
Hot Definitions
  1. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  2. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  3. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  4. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  5. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  6. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
Trading Center