Bank funding costs easing

Tuesday, 3 July 2012

What looks to be a significant correction in Australian bank CDS prices is under way, down 18% from the May peak and 9% in the last week or so. We can take CDS prices a proxy for the spread over swap that banks will have to pay for 5 year unsecured debt:

As you can see, prices are at support for the recent up trend and look likely to break down further on easing European concerns.

Over the longer term of course it is a very different story:

About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.