Last week's derisking continued, however at a more moderate pace, with $83 billion of net notional increase in CDS versus $138 billion last week. Only the healthcare and industrials sectors saw a rerisking, with industrials due for a substantial technical push wider after 2 weeks of rerisking. On the derisking side, sovereigns/state bodies saw a $30 billion increase in net, not surprising with all the craziness in Europe and Asia, while consumer services had a net $21 billion increase in notional.
Gross outstandings increased slightly, confirming the trend that accounts are actively shorting risk as the equity market plunges, but at a much slower pace. Gross single name notional increased from $14.4 trillion to $14.5 trillion, while indices and index tranches climbed from $13.8 trillion to $14 trillion, for total gross notional outstanding $28.5 trillion.
Technicals indicate the downside in the equity market has yet to spill over notably to the credit derivatives market.
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