In the last week, the TED spread, which measures the difference between three-month Treasurys and the three-month Libor rate, has settled into the 16-basis-points range, down from a peak on June 11 of 48.64, a decline of 65.6%, as of yesterday.

Similarly, the Libor-OIS spread, which calculates the difference between the three-month Libor rate and the anticipated average of the federal funds rate, has tightened significantly, even in recent days. The Libor-OIS closed yesterday at 10.82 basis points, down from a peak of 34.12 bps on July 15. A steep decline came from Aug. 19 to 24, when the spread fell to 12.95 from 16.61, a 22% drop.

The heights of credit costs in June were, in part, caused by the market turmoil in Europe. That has eased, however, and on Aug. 27 Federal Reserve Chairman Ben Bernanke implied that the monetary body would return to the capital markets to support credit support. In a speech on that date, Bernanke said the Fed “retains a number of tools and strategies for providing additional stimulus,” which was taken as a sign that the Fed might once again start buying mortgage-backed securities, which it did from the start of the credit crisis until last March. With the Fed in the market, bargain credit prices arguably are here to stay.