What's especially notable about the above AAA chart is its compression since it has traded at near par for months. It's not so much that the line has turned south, but for so long it had been a flatline as the AAA tranches seemed untouchable and not subject to consequences from the 'bad credit people'. In the past few weeks the picture has changed and AAA is even responding to what's going on down in the basement of BBB-, but also in AAA itself as high end folks can suddenly find themselves crunched. When adversity comes calling, even triple-A can start falling.
Wednesday, July 11, 2007
ABX Slides Even Further
Dow up 76 today, but looming in the background is subbbbbbbprimmmmme. I just can't believe the denial that's out there from the pundits who say this isn't going to spread into other areas of the credit market. The denial is not just unbelievable, but shocking given how fat and happy everyone was in the credit universe before the bottom fell out in January. I'm not known for making sweeping and alarmist pronouncements, but folks - this is a DISASTER. The first picture is the AAA-07-1 series. Yes, cream of the crop AAA, not BBB-.