Credit default swaps are back in fashion — even if the panic might be overblown
1. Investors are increasingly buying CDS to hedge against U.S. debt default risk. 2. The cost of 1-year CDS has risen sharply to 52 basis points this year. 3. Concerns about U.S. fiscal health and political dysfunction are driving investor behavior. 4. The upcoming debt ceiling negotiations could significantly impact the market sentiment. 5. Historical CDS spikes often correlate with U.S. debt worries, notably in past crises.