Are Credit Markets Signaling More Pain For Stocks?

As an early warning system, I put together an index of Credit Default Swaps that should be very sensitive to nascent credit problems in the Far-East.

The components are very volatile so watching it day-to-day is probably not that useful. But the trend and the levels seen during past times of global financial stress are very important.

As you can see on the chart below, these CDS are in no way at crisis levels, but they are not trending in the right direction. Should the widening continue, it may start spilling into our markets in a much more meaningful way than what we have seen so far.

china credit default swaps cds stress chart 2008-2015

Good luck and good trading!

 

Twitter:  @FZucchi

Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

 

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