Market Outlook: Euro-Denominated CDSs Decline

The cost of insuring Euro-denominated loans against default through credit default swaps has decreased during the holiday period, aided by rising stock markets. The pan-European Stoxx Europe 600 index rose by 0.4%, supported by gains in banking, technology, and energy stocks. However, trading remains quite subdued. Jefferies analyst Brad Bechtel noted that the timing of Christmas Day falling on Wednesday this year makes volumes and liquidity "quite challenging" for the remainder of the week. According to S&P Global Market Intelligence data, the iTraxx Europe Crossover index, which tracks Euro junk bond defaults, fell by 2 basis points to 307bps. Meanwhile, the iTraxx Europe Main index, tracking Euro investment-grade CDS, decreased by 1 basis point to 56bps.