CDS spreads show widening capacity

It’s been a while since the eurozone’s periphery had any meaningful impact on broader market sentiment. Mario Draghi’s “whatever it takes” pronouncement in 2012 put paid to the regular bouts of volatility emanating from Europe’s beleaguered sovereigns. But on May 15, just over four years since the first Greek bailout, we received a reminder that peripheral CDS spreads still have the capacity to widen. And the movements weren’t insignificant—about a month’s worth of gains was wiped out in an afternoon.