Bank and Broker Default Risk Pulls Back

Below we highlight historical 5-year credit default swap (CDS) prices for six of the largest US banks and brokers.  Even after yesterday's big market decline and the ratings downgrades by Moody's after the close, default risk for the major financial firms continues to pull back.  The fact that default risk declined following the Moody's downgrades shows that the news was already priced in, and it's a good sign for those bullish on the sector.