CDS Market Data Update
Derisking still in full force in most categories although with 30% subdued trading action, as shorts took significant profits in sovereigns and basic materials. Net notional change of $8.1 billion this week versus $83 billion last week, and net contracts exchanged hands were 9,535 versus 13,892 prior. Sectors where shorts poured into the most, were financials, consumer services and consumer goods.
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Gross outstandings dropped by $1.1 trillion, adding to worries that CDS traders are little incentivized to get back into active CDS trading and are in fact withdrawing en masse. Gross single name notional was flat at $14.5 trillion, while indices and index tranches dropped from $14 trillion to $12.9 trillion, for total gross notional outstanding $27.4 trillion.
Technicals indicate that the equity market weakness is still surprisingly isolated from spilling widely into the IG and XO credit space.
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