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happy labor day September 3, 2007

Posted by Bradley in : Uncategorized , trackback

Celebrate labor day by reading the latest BIS Quarterly Review, just out. It is not a happy read, beginning:

Concerns about exposures to US mortgages cast a dark shadow over global financial markets during the period from end-May to 24 August 2007, with deepening losses on mortgage-related products spilling over to markets for other risky assets. As uncertainty about the extent and distribution of these losses spread through the financial system, investors fled to safe havens and lquidity demand surged. This caused a pronounced squeeze across major financial markets, prompting central banks around the globe to inject large amounts of liquidity.
Triggered by declining confidence in the valuation of mortgage-related and structured credit products, spreads rose sharply across the credit universe, increasingly affecting higher-rated products and assets other than credit. The price of credit risk, a measure of investor appetite for credit market exposures, jumped upwards, suggesting that a large part of the ongoing repricing was due to changes in investor sentiment towards risk.


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