Global Macro Trading Journal

The non-triggering of CDS so far has been a good policy. Had they triggered on the first haircut proposal(20 something %) the payouts would not be realistic compared to how much people would eventually lose on the bonds(70%+)
 
Quote from Daal:

The non-triggering of CDS so far has been a good policy. Had they triggered on the first haircut proposal(20 something %) the payouts would not be realistic compared to how much people would eventually lose on the bonds(70%+)
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Do CDS payouts (as commonly written into the contracts) depend on the 'magnitude' of a default, i.e. the seller is only required to make up any difference between the original credit terms and new/post-default terms?

I know this is how it was done by e.g. the muni bond insurers here in the USA, but I was under the impression CDS sellers were obliged to pay out in full if a default were to occur. For instance if I hold a $1000 bond which is defaulted and written down to $800, CDS seller owes me $1000 regardless.
 
Quote from Specterx:

Do CDS payouts (as commonly written into the contracts) depend on the 'magnitude' of a default, i.e. the seller is only required to make up any difference between the original credit terms and new/post-default terms?

I know this is how it was done by e.g. the muni bond insurers here in the USA, but I was under the impression CDS sellers were obliged to pay out in full if a default were to occur. For instance if I hold a $1000 bond which is defaulted and written down to $800, CDS seller owes me $1000 regardless.
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I believe they action off the bond and use that as a guide for the payouts. So my original point might not be valid but its not a full payout like you suggest though
 
I've been reading this thread for a long time; it's probably my favorite.
Breaking silence merely to say, re the sa cite just previous: Torquemada had to be a stage name.
Carry on...
 
Quote from gmst:

Short term tactical trade call:

Long EURAUD 1.2395, Target 1.26+, Stop 1.2295 (R:R 1:2). If target doesn't reach, exit at end of week.
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Closed at 1.2590, for a profit of 195 pips in 2 days :) Better than my expectations!

Actually pair is quite strong and there is no reason to close it yet, other than that I don't like to keep trades over the weekend yet.
 
So the Euro heading back to 1.40 against the USD?

After so much bad news...

What are those who have been pounding on the parity call, and many smart men have, missing?

My personal opinion is they will hover between 1.20 and 1.40 for some time to come but no real breakdown either way will occur.
 
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