[HN Gopher] US 5-year credit default swaps rise to highest since...
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US 5-year credit default swaps rise to highest since 2011
Author : almog
Score : 10 points
Date : 2023-04-21 22:15 UTC (45 minutes ago)
(HTM) web link (www.reuters.com)
(TXT) w3m dump (www.reuters.com)
| techie128 wrote:
| When the price of a CDS rises, it indicates that the market
| perceives an increased risk of default on the underlying debt. In
| the case of US 5-year credit default swaps rising to their
| highest levels since 2011, this suggests that investors are
| becoming more concerned about the creditworthiness of US debt.
|
| This is concerning because if the US were to default on its debt,
| it would have serious repercussions for the global financial
| system. The US dollar is the world's reserve currency, and US
| government debt is widely held by central banks, financial
| institutions, and individual investors around the world. A
| default by the US could lead to a global financial crisis, with
| significant impacts on economies and financial markets around the
| world.
|
| Furthermore, rising CDS prices can also indicate a broader loss
| of confidence in the US economy and government, which could lead
| to higher borrowing costs for the US government, and potentially
| slower economic growth.
| michaelmarkell wrote:
| This reads like it was written by ChatGPT
| atwebb wrote:
| There are 4 comments in this thread (5 including mine) and
| ChatGPT is already mentioned twice. Interesting how quickly
| things adapt/change.
| nickvanw wrote:
| Asking ChatGPT "Why does the price of a Credit Default Swap
| rise?" gets you:
|
| > The price of a Credit Default Swap (CDS) rises when the
| market perceives an increased risk of default by the
| underlying entity, such as a company or government.
|
| > A CDS is a financial instrument that allows investors to
| protect themselves against the risk of default by an issuer
| of debt. The buyer of a CDS pays a premium to the seller, who
| agrees to pay a fixed amount in the event of a default. The
| price of the CDS reflects the perceived risk of default by
| the underlying entity.
|
| > If the market perceives an increased risk of default by the
| underlying entity, such as due to a weakening financial
| position, deteriorating economic conditions, or a downgrade
| in credit rating, then the price of the CDS will rise. This
| is because investors will demand a higher premium to
| compensate for the increased risk.
|
| > Conversely, if the market perceives a reduced risk of
| default, such as due to an improvement in the financial
| position or a credit rating upgrade, then the price of the
| CDS will fall, as investors require a lower premium to
| compensate for the lower risk.
|
| I think it sounds that way because it probably was!
| techie128 wrote:
| ChatGPT was trained on text written by humans, so its not a
| surprise that you're confusing text written by a human with
| one written by ChatGPT.
| mupuff1234 wrote:
| Should I be worried about money currently sitting in money market
| funds (VUSXX)?
| rpvnwnkl wrote:
| That might be a good question for chatGPT
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