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Bank Counterparty Risk Surges To 4-Year High

Tyler Durden's picture




 

In September, interbank credit markets flashed a quick and brief warning that something was up... and Janet folded. Three months later and following The Fed's oddly-timed rate-hike, interbank counterparty risk - as proxied by the TED-Spread - has spiked over 45% in 2 days, the most since Sept 2008 (Lehman).

The TED Spread is the difference between the interest rates on interbank loans and on short-term U.S. government debt and as such offers a proxy for how banks themselves perceive the relative creditworthiness of the financial system. The last time TED spread was surging to this level was late 2011, as Europe's crises was exploding.

Which makes one wonder whether The Fed rate hike was - as we detailed here - an implicit bailout for foreign (read European) banks?

But the pace of increase is extremely worrisome historically

(h/t Brendan Ferro)

The Fed just hiked into this massive two-week surge in TED spreads; as opposed cutting by 75 bps in 2008 and unleashing more QE at Jackson Hole in 2011!  That hike seems akin to what happened in Sep-08 when Lehman went Bankrupt.

US financials credit risk continues to push wider (with stocks remaining cognitively disssonant for now).

Charts: Bloomberg

With the Fed's own National Activity Index tumbling, its own Financial Stress Index soaring, and now major concerns about the US financial system's stability looming, one has to ask, how long before Janet unleashes the next QE?

 

 

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Mon, 12/21/2015 - 16:55 | 6950390 KnuckleDragger-X
KnuckleDragger-X's picture

I see he managed to sneak Lehman in there......

Mon, 12/21/2015 - 16:56 | 6950392 Manthong
Manthong's picture

Well, that is a bit disconcerting because I know that the most important bank counterparty to me is me.

Je suis counterparties.

 

Mon, 12/21/2015 - 17:02 | 6950423 knukles
knukles's picture

Ah, not to worry.  They're just Joshin' ya'

Mon, 12/21/2015 - 17:41 | 6950557 NoDebt
NoDebt's picture

This has to be the first mention of the TED spread since 2011.  And a bonus "since Lehman", too!  Well done.

Mon, 12/21/2015 - 18:50 | 6950731 JRobby
JRobby's picture

It will Freeze Up

Chaos ensues

 

But, but global warming?

Mon, 12/21/2015 - 17:45 | 6950573 Consuelo
Consuelo's picture

"...how long before Janet unleashes the next QE?"

 

Yeah, but they forgot the Kraken...

Mon, 12/21/2015 - 16:57 | 6950398 Mark Mywords
Mark Mywords's picture

Speaking of surges...the equity *markets* sure have surged in the past 15 minutes.

I LOL'd so loud.

Mon, 12/21/2015 - 17:17 | 6950482 xrxs
xrxs's picture

Must... Hold... 2000...

Mon, 12/21/2015 - 17:30 | 6950521 Sudden Debt
Sudden Debt's picture

The dow, s&p and nasdaq look like a mirror image of each other while the companies couldn't be more different...

 

Mon, 12/21/2015 - 16:59 | 6950407 Mentaliusanything
Mentaliusanything's picture

Well both Italy and Spain have some borrowing Pain. 

Not a place i would want an Unsecured deposit

Mon, 12/21/2015 - 17:34 | 6950534 Sudden Debt
Sudden Debt's picture

Make that the rest of europe and America.

Over here on the news, they where talking what people should do with their christmas bonus....

Guess what... buy government bonds.... and some notwit was explaining for over 10 minutes why it's the best investment for young and old.... on the god freaking news...

Because otherwise people just save that money and don't spend it... ehe... right... most people use it to pay bills.

When the next crash comes, we'll all lose our deposits. Stocks, bonds and money.

 

Mon, 12/21/2015 - 18:05 | 6950629 Gambit
Gambit's picture

Thats why Gold bitches... borrow on cards at 0% buy gold.  So if the confiscate all that is in you account is debt, plus... plus or minus couple of hundred in deposit for bills. 

Mon, 12/21/2015 - 17:02 | 6950419 Rainman
Rainman's picture

Everybody knows there's a lot of hot paper flying around out there < since Lehman >

Mon, 12/21/2015 - 17:56 | 6950606 Sudden Debt
Sudden Debt's picture

You're so right! Where are all those bad bank assets now? Rolled over and resold with a different label.

And the banks that sold their crap? They just made new crap.

If anybody is surprised how bad shit will be when we crash throuh the floor, they should be smacked a dozen times over.

Mon, 12/21/2015 - 17:04 | 6950433 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Time for a counter panic party.

Mon, 12/21/2015 - 17:17 | 6950480 centerline
centerline's picture

No worries. Bilateral netting will save it all if something funny happens.

/s

Mon, 12/21/2015 - 17:18 | 6950485 maneco
maneco's picture

I touched open the subject of Financials in this video entitled D-Day for Fed Fiat Credit Sytem:  

https://youtu.be/v_5QBJx0Im8

Do NOT follow this link or you will be banned from the site!