Well, equally good is the buzz from tight spreads. (Although the buzz would be even better with beer.) The TED spread and the Libor-OIS spread remain blissfully tight. The TED is sitting at 15.97 today, up about 1.943%, while the Libor-OIS is up more than 2% today, but is still at a comfortable 10 basis points.

LIBOR-OIS SPREAD

The TED measures the difference between three-month Treasurys and the three-month Libor rate; the Libor-OIS measures the difference between the three-month Libor rate and the anticipated average of the federal funds rate.

In fact, when you start contemplating these ice-rink-flat spreads, you start to see the invisible hand at work. No, not that invisible hand; the invisible hand of the federal government. It is the government that keeps Treasurys and the money rates in check, which means the spreads do not truly reflect the continuing credit instabilities in the general banking markets. Rather, they reflect the government’s want, and the government wants low rates. As I said, these spreads as good as a beer buzz early in the morning.