Weekly CDS Change Update Per DTCC - Technical Recommendations

New DTCC weekly change numbers released for week ended January 23. Most notable is the huge gross notional and contractual amount of full terminations of consumer services CDS. Looks like funds are fully covering overhanging shorts. As this has been the most profitable position over the past 3 months it is not too surprising. Based on this technical data, we would recommend establishing short positions in the space due to the diminishing risk of a mass squeeze. Other data indicate that aside from consumer services, risking action has been roughly equally split with derisking in basic materials, consumer goods, health care, tech/telecom, utilities, and other, and only sovereigns have seen a marked rerisking. Today's market action indicates that equities are again chasing credit.

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