Looking at CDS.....Again

This may be getting a bit boring, but I want this point driven home: asset prices are not recovering. Bank stocks are moving higher (we'll get to that in another post), but it is not because the market perceives asset quality to be improving.



Two tranches closed at record lows today. Every tranche is trading within 9.2% of its lowest closing level. I really don't expect the BBB- CDS to move much, but the single A and higher tranches are not budging either.




Twenty-eight CMBX tranches closed at new highs today. The only ones trading markedly off their highs are the AAA tranches. Not coincidentally, these tranches represent the types of securities eligible for purchase by the asset purchase programs.

Please review the posts from 11/18/08, 2/24/09, 3/28/09 and 4/8/09 for more details.