by Pater Tenebrarum
A Signal Loses Its Significance
As a friend recently reminded us, the charts of credit default swaps (CDS) on sovereign debt in the euro area that we are regularly updating in these pages may no longer be indicative of the underlying reality of market perceptions.
This is so because the EU’s bureaucrats, in their ongoing attempts to manipulate markets, have issued a ban on so-called ‘naked’ trading in CDS. This means that speculators are no longer allowed to buy and sell CDS contracts to merely express their opinion. Unless one holds the underlying bonds, one will no longer be allowed to trade these credit instruments from November 1 onward.