TED spread

The difference between the rate for Treasury bills and the rate for Eurodollar bills. The acronym stands for Treasuries/Eurodollar spread. The TED spread is created by taking simultaneous but opposite positions in both Eurodollar and T-bill futures contracts that have the same maturity. Traders create this spread to bet on the general direction of interest rates. The difference in price is an indicator of credit risk. If the TED spread increases, it indicates increasing credit risk, and if it decreases, it indicates falling credit risk.