
A Tulip By Any Other Name: What Happened to the Big Bad CDS Market? – ViableMkts
August 12, 2016 \
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Full Article: ViableMkts
In 2007, the market for Credit Default Swaps (CDS) was on a six year journey from relative obscurity, to being the hottest financial product in the world. The outstanding notional size of the market had grown from less than $1 Trillion in the beginning of 2001, to over $60 Trillion by the end of 2007, with no signs of stopping. Almost ten years later, the outstanding size of the CDS market is hovering just over $10 Trillion, the result of eight consecutive years of decline.
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4 Comments on "A Tulip By Any Other Name: What Happened to the Big Bad CDS Market? – ViableMkts"
One of the issues was that it wasn’t a proxy for the underlying bonds. News would come out, CDS would blow out 20, 30, 50, 75 (or much more), bonds would be unchanged and then CDS would be flat again. So, what was it really tracking? It very much become the tail that wagged the dog.
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