Jul 9, 2019

Perceived credit risk for the U.S. at lowest level in 40 years

Data: Federal Reserve Bank of St. Louis, FactSet; Chart: Axios Visuals

The TED spread, a measure of the perceived credit risk in the U.S. economy, matched its lowest level in at least 40 years last week.

The breakdown: As Ken Faulkenberry at Arbor Investment Planner explains it: "Comparing the risk free rate [of 3-month U.S. Treasuries] to LIBOR provides an indication of the risk the global markets perceive in the global banking system."

  • "A rising or high TED spread will often precede a downturn in the stock market because it indicates increasing risk of bank defaults and economic instability. A falling or low TED spread would indicate low risk of bank defaults and economic stability."

How it works: The metric tracks the 3-month U.S. Treasury bill yield and the value of the 3-month eurodollar futures contract, or 3-month LIBOR. ("T" for Treasury bill and "ED" for eurodollar.) It essentially measures the level of trust between banks or how creditworthy they deem one another.

Go deeper ... Warning: Signs of credit crisis grow

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Big banks cash in on consumers

Illustration: Sarah Grillo/Axios

The flush U.S. consumer is lifting profits for the big banks, busily pouring free cash into savings and checking accounts while spending on credit cards and borrowing money to buy homes.

Why it matters: The strength and optimism of the American consumer continue to underpin the record-long economic recovery — and stand as a contrast to the gloomy outlook expressed lately by business leaders. "There's solid consumer activity across the board," said Bank of America's CEO, Brian Moynihan, echoing sentiment from his competitors at JPMorgan Chase, Citigroup and others.

Go deeperArrowJul 18, 2019

Delinquencies spike with record-high credit card interest rates

Data: St. Louis Federal Reserve; Chart: Axios Visuals

Since 2014, credit card interest rates have risen 4.4 percentage points, representing a 35% increase in costs for consumers, data from NerdWallet shows, despite the fact that U.S. interest rates remain at historical lows.

Context: Though the rate remains historically low, delinquencies are up 22% since 2015.

Go deeperArrowJul 31, 2019

What to do if you're a Capital One customer whose info was hacked

Photo: Rafael Henrique/SOPA Images/LightRocket via Getty Images

Approximately 100 million Capital One customers in the U.S. and Canada are caught up in a data hack that the bank claims happened in March. If you think you're among them, here are a few steps you can take.

Where to start: The bank says it will notify all affected customers, including 140,000 whose social security numbers were compromised, and offer identify protection services and credit monitoring. Both are worth taking advantage of.

Go deeperArrowJul 30, 2019