Drought, gloom and technicals scythe down withering CDS

05 Dec 2008

Dealer hedging, the withdrawal of liquidity and sheer, unadulterated economic gloom this week conspired to send credit default swap indices to new peaks.

While it was the Markit iTraxx Crossover index dealing over 1000bp that attracted most of the attention, it is the levels at which the Europe index is dealing that indicate much more worrying, if unlikely, breakeven default levels

The Crossover traded through 1000bp on Wednesday and closed yesterday (Thursday) ...

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