Inflation’s Sweetspot: Jitters Over Debt Crisis Subside

At the start of the year, financial markets, particularly in developed economies, had been jittery over the contagion effects of the debt crisis in the PIIGS area led by Greece.

Now, such concerns appears to have reversed, as highlighted by the table below from Bespoke Invest, which covers 5- year CDS swap prices and includes the ‘four problematic’ US states.

According to Bespoke,

European countries rank first through fifth in terms of decline since July 2nd. Belgium has seen default risk decline the most at 30.1%. Belgium is followed closely by Spain (-29.1%), Italy (-27.3%), and France (-26.2%). The four US states highlighted are Illinois, California, New York, and New Jersey. All four states declined roughly 20%, with California decline the most (-22.3%) and New Jersey declining the least (-18.6%).

In terms of default risk levels, Venezuela ranks highest, followed by Argentina, Greece, and Dubai. The four US states highlighted aren't too far from the top of the list and have higher default risk than countries like Spain and Italy. The US, Germany, Australia, the UK, and France currently have the lowest default risk.

Ah, behold the seductive ephemeral wonders of inflationism!