Australian banks Australian interest rates

Bank funding cost rocket sparked by negative watch

Friday, 8 July 2016

Some clear evidence that yesterday’s S&P negative watch on everything Australian debt did impact banks spreads. CBA CDS widened 2% to 87bps:

On the same day, our European proxy, Credit Agricole, saw an easing in spreads of -1.6% and our US proxy, Wells Fargo, eased -3.5%. Thus the Australian Ponzi Index rose strongly from recent lows:

There was no movement in global high yield to speak of:

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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.