{"id":704120,"date":"2010-03-30T00:38:00","date_gmt":"2010-03-30T04:38:00","guid":{"rendered":"http:\/\/www.businessinsider.com\/goldman-tightening-cds-spreads-bullish-for-us-financials-2010-3"},"modified":"2010-03-30T00:38:00","modified_gmt":"2010-03-30T04:38:00","slug":"goldman-cds-traders-getting-aggressive-on-u-s-banks-pnc-cof-sti","status":"publish","type":"post","link":"https:\/\/mereja.com\/index\/704120","title":{"rendered":"Goldman: CDS Traders Getting Aggressive On U.S. Banks (PNC, COF, STI)"},"content":{"rendered":"

Goldman’s Equity, Credit, and Options Market Monitor, part of their cross-product research platform argues that the fixed income market, via credit default swaps, is pushing a bullish case for U.S. financial stocks. Thus they’re part of the recent excitement over U.S. banks from Wall St.:<\/p>\n

Goldman:<\/span><\/p>\n

5 year CDS spreads on the financials sector tightened more over the past week (-5%) and month (-20%) than any other sector. We believe these moves are supportive of a continuation in the Financials equity rally as well as a decline in long-dated financials volatility. PNC, COF, and several regional banks were among the largest tighteners in CDS this week<\/p>\n

The concept seems to be that financial equity prices should track perceptions of creditworthiness from the credit default swaps market:<\/p>\n

\"Chart\"<\/p>\n

Major movers based on CDS spreads below. Note this piece of research doesn’t carry specific stock ratings, but is rather a more top-down product.<\/p>\n

\"Chart\"<\/p>\n

(Via Goldman Sachs, Equity, Credit, and Options Market Monitor, John Marshall, 29 March 2010)<\/em><\/p>\n

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