CDS

Interesting observation, correlating the ratio of US to Japan CDS (especially with Japan CDS' tightening 7 bps while USA CDS was 2 bps wider) versus the JPY/USD (inverted axis). Is the sovereign risk trade trying to find other conduits for expressing relative risk in this environment where no sovereign risk seems to exist anymore as all countries are expected to print, print, print all their problems away.

Interesting observation, correlating the ratio of US to Japan CDS (especially with Japan CDS' tightening 7 bps while USA CDS was 2 bps wider) versus the JPY/USD (inverted axis). Is the sovereign risk trade trying to find other conduits for expressing relative risk in this environment where no sovereign risk seems to exist anymore as all countries are expected to print, print, print all their problems away.

Interesting observation, correlating the ratio of US to Japan CDS (especially with Japan CDS' tightening 7 bps while USA CDS was 2 bps wider) versus the JPY/USD (inverted axis). Is the sovereign risk trade trying to find other conduits for expressing relative risk in this environment where no sovereign risk seems to exist anymore as all countries are expected to print, print, print all their problems away.

If "Buy CDS" was the prior week's motto, this one's was "Do nothing, act busy, make many trips to kitchen." A paltry $6 billion in net CDS exchanged hands in a rerisking direction.

If "Buy CDS" was the prior week's motto, this one's was "Do nothing, act busy, make many trips to kitchen." A paltry $6 billion in net CDS exchanged hands in a rerisking direction.

As Zero Hedge initially reported nearly two months ago, the main reason why the banks' fixed income trading desks generated phenomenal profitability in January and February had nothing to do with actual trading of fixed income and everything to do with AIG's hamheaded (and loss-generating) unwind of its CDS book, which by implication generated one-time, massive profits for counterparties to the trade (read: the banks, which are now doing all they can to issue shares in the open market day in and da

"Buy CDS" - that was the overarching theme from last week as $141 billion of rerisking occurred across all major sectors. Absent some nominal CDS derisking in Oil & Gas and Tech/Telecom, every single space saw credit traders betting that risk will increase. Of course, absent some swooning on Monday of this week, irrational exuberance 2.0 still dominates the equity markets, once again implying that credit is either generally more pessimistic than equities, or that CDS traders are much faster to bail at the first whiff of the squeeze ending.

"Buy CDS" - that was the overarching theme from last week as $141 billion of rerisking occurred across all major sectors. Absent some nominal CDS derisking in Oil & Gas and Tech/Telecom, every single space saw credit traders betting that risk will increase. Of course, absent some swooning on Monday of this week, irrational exuberance 2.0 still dominates the equity markets, once again implying that credit is either generally more pessimistic than equities, or that CDS traders are much faster to bail at the first whiff of the squeeze ending.

There has been some media and political debate lately over who if any entities may have profited from a Chrysler bankruptcy due to CDS holdings. As is often the case, when you get the mainstream media entering the ever so slightly more complex world of CDS contracts, many of the theories that develop have the same "logic" that is underpinning the current market rally.

Last week was relatively quiet in the CDS market, shadowing the complete lack of liquidity in equities. Notable traded sectors were consumer Services and Industrials which saw a net gross notional rerisking of $32 and $39 billion, on 7,127 and 3,888 contracts respectively. Aside from these two sectors, the only other sector that saw marginal rerisking was Tech/Telecom with $11 billion in notional traded. All other sectors saw a net rerisking, for a total tally in the prior week of a rerisking of $23 billion.

Last week was relatively quiet in the CDS market, shadowing the complete lack of liquidity in equities. Notable traded sectors were consumer Services and Industrials which saw a net gross notional rerisking of $32 and $39 billion, on 7,127 and 3,888 contracts respectively. Aside from these two sectors, the only other sector that saw marginal rerisking was Tech/Telecom with $11 billion in notional traded. All other sectors saw a net rerisking, for a total tally in the prior week of a rerisking of $23 billion.

In a watershed case, the SEC has launched its first CDS insider trading case implicating Millennium Partners portfolio manager Renato Negrin and Deutsche Bank CDS trader Jon Paul Rorech. According to the SEC, Negrin and Rorech engaged in illegal activity in the CDS of VNU N.V., a Dutch holding company that owns Nielsen Media, and made a $1.2 million profit.

Last week was characterized by unprecedented rerisking in financial names, to the tune of $145 billion in notional change, representing over 28 thousand contracts. This was caused by an imbalance in New Trades ($173 billion) versus Full Terminations ($297 billion). Was the credit market a little trigger happy to say all green shoots in financials are in place? Or merely the equity driven short squeeze has forced even the usually cooler fixed income heads to push the "cover" button.

Last week was characterized by unprecedented rerisking in financial names, to the tune of $145 billion in notional change, representing over 28 thousand contracts. This was caused by an imbalance in New Trades ($173 billion) versus Full Terminations ($297 billion). Was the credit market a little trigger happy to say all green shoots in financials are in place? Or merely the equity driven short squeeze has forced even the usually cooler fixed income heads to push the "cover" button.