Stock Market Crash Alert: Credit Default Swaps From 2008 Are Back

• Stock Market Crash Alert: Credit Default Swaps From 2008 Are Back
  by Shrey Dua, www.msn.com
  Stock market crash fears are eating up Wall Street as credit default swaps (CDSs) rise to the highest level since 2008. Indeed, it seems that concerns over the government debt are pushing traders away from domestic debt investments.
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  What’s going on with credit default swaps lately?
  Well, according to S&P Global Market Intelligence, spreads on five-year credit default swaps are up to 51 basis points, more than double from January. Meanwhile, one-year government default swaps are trading at around 106 basis points, the most expensive since 2008, according to the Financial Times.
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  Credit default swaps are essentially insurance against a borrower’s debt. As such, changes in the price of government CDSs can inform the level of risk traders feel about the potential of a government default.
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  Currently, with the government still attempting to pass legislation raising its debt ceiling ahead of its projected August default timeline, traders are (perhaps rightfully so) pricing in a higher chance that the government fails to make a payment, thereby going into default.
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  At the moment, investors are willing to pay almost $10,000 to insure $1 million in U.S. Treasury debt, a notable increase from the $1,400 it cost at the start of 2023. This implies a roughly 2% chance of a U.S. default.
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