28 July 2014 by HCM
Looking back at what happened in the CDS market over the last month, the market appears to be trapped in a local equilibrium. All European sectors have traded in tight ranges compared to the recent volatility. Financials have traded in a 10 bps ranges while the other sectors have traded in less than 6bps. More investors are playing the tight ranges. But, this pattern of stability is rather unusual. As a consequence, an outbreak of the recent ranges should be significant as a brutal freezing of below zero degree Celsius liquid water.