From the Trend is Your Friend Department

November 26th, 2008 11:13 am | by John Jansen |

     Nov. 26 (Bloomberg) — The cost of hedging against losses 
on U.S. Treasuries surged to an all-time high after the Federal
Reserve
’s new $800 billion effort to combat the financial crisis
raised concern about ballooning government debt.               
     Benchmark 10-year credit-default swaps on U.S. government 
bonds jumped six basis points to 56, according to CMA Datavision
prices at 11 a.m. in London. The contracts have risen from below
two basis points at the start of the credit crisis in July 2007.

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  1. 4 Responses to “From the Trend is Your Friend Department”

  2. By Dave in SV on Nov 26, 2008 | Reply

    Does that imply the U.S. is no longer AAA? tx

  3. By John Jansen on Nov 26, 2008 | Reply

    No.

  4. By cyclingscholar on Nov 26, 2008 | Reply

    Will the cost of hedging against losses eventually get so high they just decide to….HORRORS! sell their Tbonds? I would think a reduction in the risk aversion evident in recent trading (as long as it lasts) would pull money out of safe havens like Long T-bonds…which aren’t really THAT safe, with their long lives?

    cyclingscholar

  5. By a on Nov 29, 2008 | Reply

    “No.”

    Why not? 56 bips shouldn’t be AAA.

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