As the number of high yield defaults is at a post crisis high, illuminating bond risk, it’s time to hedge in the high yield credit, a Morgan Stanley credit derivatives piece says. Looking at a variety of methods to accomplish investor goals, the report considers credit default SWAPs as the preferred execution method to express bearish opinions. Recent bond risk signals might be muted Technical indicators have been potentially sending improper bond risk signals in corporate credit markets recently, but don’t be deceived. Technicals “can and often do change on a dime,” Morgan Stanley credit derivatives analysts wrote in a May…
Bond Risk Exists, Here's How to Hedge With Credit Default SWAPs
Mark Melin
Mark Melin is an alternative investment practitioner whose specialty is recognizing the impact of beta market environment on a technical trading strategy. A portfolio and industry consultant, wrote or edited three books including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008) and taught a course at Northwestern University's executive education program.