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Derivatives

U.S. ABCDS Eclipses Struggling Euro Market

The U.S. ABCDS market has surged over its European counterpart because of the availability of attractive underlying assets.

The U.S. ABCDS market has surged over its European counterpart because of the availability of attractive underlying assets. Panelists agreed there is broader selection of ABS maturities and geographic concentrations, but more importantly the U.S. home equities market is volatile and therefore offers more value. In addition, U.S. hedge funds are more willing to short ABS, while the majority of the European investor base is long-only which sucks out liquidity. Speakers also noted there is more capital to invest in the U.S. and more private funds taking directional views.

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