Bespoke's Bank and Broker CDS Index
Sunday, February 12, 2012 at 09:35PM Below is an updated chart of our Bank and Broker CDS (credit default swaps) Index, which measures the collective default risk of the largest financial firms around the world. We created the index during the financial crisis, but we have continued to follow its movements over the last few years as new problems have sprung up.
As shown, default risk for the major banks and brokers recently spiked to levels it had not seen since the '08/'09 bear. This spike came at the same time the equity market was making its lows in 2011 at the height of the sovereign debt crisis in Europe. As things have settled down over the past two months, our Bank and Broker CDS Index has collapsed by roughly 40%. Even after the big drop, however, financial default risk still has work to do to get back down to the comfortable levels it was trading at in mid-2011.
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