PremiumThe Hedge That Stopped Hedging: AI Default Swaps Hit Records As Goldman Finds Credit Cracking Everywhere Except The Index
Last week credit went from bad to worse, and the CDS market is where it showed first.
On Friday, after Intel guided off a cliff and Amazon's cash burn exploded, the cost of insuring the debt of Intel, Amazon, Broadcom, Microsoft, Alphabet and SpaceX against default all hit record highs, according to ICE data cited by Bloomberg. Intel's 5Y CDS jumped as much as 22.4bps in one morning to 127.9bps; AMD's went back to levels last seen in early 2019. And the investment grade CDS index that is supposed to hedge all of this? CDX IG finished the week 1.5bps tighter, at 62bps.