While still relatively low, USA sovereign CDS spreads have risen to 8-month highs, surging off early March lows. The reasons are likely numerous though we suggest the 4 surges in the last 3 months appear to line up with notable ‘events’…
While correlation does not imply causation, it does waggle its eyebrows suggestively and gesture furtively while mouthing “look over here.”
Note: Sovereign CDS represent a combination both default and devaluation risks.
Could it be that Trump’s honest comments on the creditworthiness of the USA are beginning to resonate with market participants as the probability of his winning in November rises?
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