Shares of Credit Suisse plunged more than 30% on Wednesday, while the cost of protecting against a default on its debt (through a derivative called a CDS) rocketed to new highs. The long-troubled Swiss bank is now trading 97% below its previous high.
There are plenty of potential reasons behind its inglorious descent, (we wrote about some of them here), but this week’s extreme selloff came as its biggest shareholder (Saudi National Bank) refused to put more money into the struggling bank’s turnaround plan.
And its timing seemed to put everyone on edge. On Friday, Silicon Valley Bank (SVB), a major lender to venture capital firms and startups in the Bay Area, collap
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With all this volatility, you may want to write that useful old adage down.
These spreads have widened, foreshadowing volatile days ahead.
When bond volatility is this hot, compared to stocks volatility, it’s a warning sign.