by Calculated Risk on 10/14/2008 10:18:00 PM

From the WSJ: Credit Shows Signs of Easing on Bank Rescue

The overnight dollar London interbank offered rate, or Libor, which reflects bank borrowing costs, fell to 2.18% on Tuesday from 2.47% the previous day. But the three-month Libor, a benchmark for many mortgages and corporate loans, remained high at 4.6%.

This is a very small improvement.

Data is only available weekly for some of the indicators of credit stress (see Credit Crisis: Watching for Signs of Progress), but the 3-month treasury and TED spread showed only small improvements.

The yield on 3 month treasuries rose slightly to 0.235%. I'm looking for less daily volatility and for the yield to move up closer to the Fed funds rate, or above 1.25%.

The TED spread declined to 4.30 from 4.64 on Friday. This is still far above the highs reached during the previous waves of the credit crisis. I'm looking for the TED spread to decline below 2.0 (0.5 is normal).

Also the Treasury announced another $45 billion Supplementary Financing Program (SPF) auction to support the Fed. If this program slows down borrowing, I think that would be a good sign.

There was some slight improvement today.