Two words you have not heard for a while, save in boring central bank seminars: systemic risk. A couple of weeks ago, there was an indication that it was back. The dollar interest rate 10-year swaps spread widened out by 2.5 basis points on December 7. That may not sound like much but in what has been a very complacent market for the past year it was a five standard deviation daily move, and it tells us that there could be trouble in paradise.
A bad sign. A very bad sign.
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