Rampant purchasing of protection last week. Net notional positive change (CDS purchasing) of $132 billion this week versus only $8 billion previously. Trading action also ramps up by over 300% with 30,348 contracts traded versus 9,538 last week. Virtually all sectors saw short-risk ramping except consumer services which was the only space with reriskng action.
Gross outstandings increased by $700 billion to $28.1 trillion, consisting of $14.6 trillion of single name notional, and index and index tranches of $13.5 trillion, versus $14.5 trillion and $12.9 trillion last week, respectively.
As we pointed out last week, the equity weakness is finally migrating to the IG/CDS world. We expect this week's derisking trend to accelerate into next (and to finally hammer the HY realm whose resiliency is about to be tested).
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