Alea points out that 5 year CDS spreads on Treasuries are alarming. (82 basis points). Discuss.
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Alea points out that 5 year CDS spreads on Treasuries are alarming. (82 basis points). Discuss.
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I can’t wait to get in line to take U.S. governement assets when they bankrupt, I am going to get a Stealth.
Too long. Didn’t read
Wasnt Geithner just on with Maria Bartaromo saying “We WILL not need any more Chinese money”?
CDS on the US really dont trade kids..not a very intersting mkt
3-
I heard a rumor that the Chinese government was going to cap salaries of U.S. Congressmen until they pay back all the money the Chinese government has provided to keep the U.S. afloat.
@ 4- that makes sense — seems like it would be ridiculous easy money to write that shit — like who’s gonna actually collect when the blood is running in the street. So where the frig does this number come from?
its quoted OTC, just very little trading in it
This CDS stuff is highly illiquid. Who cares? I rather go to the casino.
It’s been trading at these levels (DB quoted 85/95) all week. To be fair, all the developed sovs have been widening (UK at 127/130!) in the past few months. I heard of one fund manager that set up a vehicle to get people short exposure to European sovs middle of last year. Definitely more trading in the EUropean names than in US. What people have said over the years about US CDS is that the only realistic scenario where you could actually collect (i.e. there is still a counterparty standing) is if COngress at some point refuses to raise the debt ceiling for some period of time and you get a technical default that counts as a credit event. There would surely be deliverables that would happen to be trading below par at that time, even if everyone knew that the technical default would be cured in relatively short order.
Is the 82bps bid, offer or last trade? My guess is that it is a BS offer in an illiquid market.
Leon Panetta and other lobbyists salaries are being capped, so are Hollywood movie stars. Government privacy policy – ‘embarass the hell out of anybody we can’. Hey , let’s send out the Madoff investors and put their home address on also…
Somehow I just knew we’d get a post-grad education on Treasury CDS markets based on this post. Yay Dealbreaker!
this is total BS- seriously, DB has now jumped the shark, completely overrun by Freepers in the comments and their nonsense taken to the Front Page.
Once again interesting, but it is an illiquid market. Who is really buying it because I wouldn’t mind selling it.
might as well trade CDS on dirt…BTW why would CDS on USgovt be inside of Iswaps 5yr currently 64bps?
@13….Fuh, What?!?!??
~Fake Geico Caveman
double down bitches
I got dirt CDS bid 500. Setting up SPV to leverage that shit 4-1.
these CDS contracts reference gov;t obligations in foreign securities. what they price, for example, is the risk that the US fed govt cannot pay on euro-denominated paper
respect @3
This site and every other like it has thrived on systemic panic. The fear and uncertainty keeps us borderline manic for more information. Truth is that the worst may over and it will be a painful but uphill battle from here for a year or so. This is bad news for sites that have thrived on the panic. So look for more and more headlines about things like bogus CDS spreads on US obligations etc as sites see hit counts dwindle in value like an Alt-A MBS in Q4 08.
I will write Bruce Willis sized asteroid armageddon insurance for a relatively low premoum.
might as well trade CDS on dirt…BTW why would CDS on USgovt be inside of Iswaps 5yr currently 64bps?
I’ll sell CDS on T-bills right now. Who wants some?
writing CDS for the US gov is like promising to a fruit delivery after a nuclear armaggedon. write away. come and collect in hell.
What good are CDS’s on an organization that can LITERALLY print money?
Market too illiquid. didn’t trade
Is there any non-USD denominated gov. debt?
Isn’t CDS pointless seeing as the US could always meet any payment on its debt by just printing more dollars?
If the Fed is given authority to purchase treasuries this would be pure money printing…Under a potential default scenario this could always be invoked to raise whatever USD-denominated payment is necessary.
@20 — True for EM sovereigns, but not true for developed market sovereigns. US contract references treasuries. UK contract references UKTs. The contracts, though, can be quantoed into other currencies, for a cost. I.e. you can buy Italy CDS in EUR or buy it 10bps higher in USD (people get the joke about correlation now, though they didn’t always).
Nice work again, EP. My question to anyone buying protection on the US is who is your counterparty and what are their ratings (using either internal or external ratings)? Most banks are rated AA at best. Good luck telling risk management that you hedged AAA risk with a AA or A rated counterparty. @6, 18, 25 and 26 get the joke.
- Fixed Income
@31: The point is to sell them back into the market once the US becomes a little more fucked. No one actually expects to collect.
Sell ‘em til your hands bleed…if they go to payoff, who’s going to pay with what currency…coconut shells???
@33
Oh, it’s a game of musical chairs.
What liberatnig knowledge. Give me liberty or give me death.
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