Another short term money market indicator

I recently posted about the TED spread and how it had been marching higher (Murphy's law struck of course and it promptly reversed course right after I mentioned it.)

Zerohedge recently posted about a similiar money market stress indicator in the Chinese banking sector that bears watching.  If you want to look at the 1 month Chinese interbank lending rate in there future, here's the direct Bloomberg link

Just one reason I'm staying out of the equity playground right now.

The equity markets are always inundated with economic news and indicators.  One of those indicators that 'doesn't really matter until it does' is the TED (Treasury / EuroDollar) spread or the difference between short term US Treasury rates (Treasury) and short term dollar denominated debt in Europe (Eurodollar)  It is a good indicatior of distress in the short term money markets and before the crisis of fall 2008 the TED spread was flashing a warning signal. 

As you can see from the chart above the TED spread has started to turn upwards after spending all of 2009 in a steady decline.  You can play with the graph at stockcharts.com if you want to zoom in or change the indicators.  While the TED spread is currently below the elevated levels of early 2008 it has been consistently rising since late April 2010.    This rise also lends credence to the feeling many have (including myself) that this correction is different than all the others we've had since the March 2009 lows.

Until the TED spread takes a rest from its ascent I'll most likely be watching the stock market from the sidelines.

edit: stockcharts.com does not show the TED spread in real time. You can watch it real time here:  http://www.bloomberg.com/apps/quote?ticker=.TED%3AIND