( HINT: Click-and-drag left-to-right on a chart to zoom in to a specific date range. Double-click on a chart to zoom back out. )
TSO (formerly TED Spread*) Indicator ChartThis chart shows the TSO Spread, in relation to the S&P 500. The TSO (T-Bill, Sterling Overnight) Spread is the difference between the SONIA (Sterling Overnight Index Average) and the 3 Month Treasury Bill. The Sterling Overnight is Europe's equivalent to the United States' Federal Funds Rate. A rising TSO spread is a bearish indicator, as it is evidence that liquidity is being withdrawn from the financial markets. A high TSO Spread indicates higher perceived risk in lending, as interbank rates rise against risk-free treasury rates, and is generally a bearish signal, a leading indicator, in market timing systems.
*The TED Spread was the difference between the LIBOR (London Interbank Offered Rate) and the 3 Month US Treasury Bill. However, the LIBOR was discontinued in 2021. The SONIA is a suitable replacement for this study.
NOTE: In the chart above, TSO Spread values before 1997 are based on the LIBOR, while values after 1997 are based on the SONIA.