Broken Markets Spreading

Tyler Durden's picture

From Peter Tchir of TF Market Advisors

Broken

For those not "lucky" enough to be involved in the CDS market, liquidity is breaking down in Europe.  Main was quoted as tight as 1/2 bp markets yeserday, is now being quoted on 2 to 3 bp markets, mostly by traders who seem to wish they had left an hour ago.  XOVER, is at least 5 bps wide, and as much as 10 bps wide, but the dealers still brave enough to send something. 

This is not good, and although wider, it hasn't yet felt like anyone is reaching and paying too much just to get a hedge on, which makes me think this is not yet over.

IG16 is holding in reasonably well, but even there the bid/offer has moved back to 1.5 bps so dealers do not want to provide liquidity here.  My IG200 hats are still worthless, but MAIN 200 seems a distinct possibility, even before the close as the best offer I just saw was 196, and that is probably flaky given SPX just broke 1155.