Is the world headed for Inflation or Deflation?
From the Credit Default Swap (CDS) market perspective…
NEITHER.
Instead, it has been a GOLDILOCKS time, as the cost of insuring debt has materially declined for most of the world except Japan, Israel and Iceland!
Markets have been pricing in reduced risks of sovereign credit defaults despite massive stimulus expenditures engaged by global governments as shown by the updated table of CDS standing by Bespoke.
From the Credit Default Swap (CDS) market perspective…
NEITHER.
Instead, it has been a GOLDILOCKS time, as the cost of insuring debt has materially declined for most of the world except Japan, Israel and Iceland!
Markets have been pricing in reduced risks of sovereign credit defaults despite massive stimulus expenditures engaged by global governments as shown by the updated table of CDS standing by Bespoke.
Chart from Bespoke
And the best performers have been emerging markets.
This from Bespoke Invest, `Russia and China are in the top five of countries that have seen default risk decline the most. Germany and France haven't seen their default risk decline by much, but it also didn't rise nearly as much as other countries during the height of the crisis. Germany, France, and the US have the lowest default risk in the world.”
The Philippine sovereign has been ranked 13th among the best performers. No wonder the huge demand on its recent offering.
The Philippine sovereign has been ranked 13th among the best performers. No wonder the huge demand on its recent offering.
Well it is likely that this has been a short-term honeymoon, as the US Federal deficits have now exceeded US $1,000,000,000 9 months into the fiscal year.
Chart from John Maudlin/safehaven.com
And this seems more likely to be the proverbial calm before the storm.
