Here’s an interesting piece of perspective, courtesy of Mr. Market.
It appears the Germany crisis is fading, partly thanks to the rock solid Angela Merkel, and fears of a U.S. debt crisis are edging back into the lime light, if the views of credit default swap traders mean anything:
As the folks at Standard Poor’s Valuation and Risk Strategies division noted in a research note Monday, the difference between the spread on U.S. sovereign credit default swaps and an equivalent benchmark for AAA-rated euro-zone sovereigns flipped into positive territory March 12. As U.S. CDS spreads expanded to their widest levels in two years, that cross-region gap blew out to 5.7 basis points last Friday before narrowing to 4.7 Tuesday.
Given that the euro is making new near-term lows against the dollar right now, perhaps it’s time to consider closing the euro short and going long. America’s problems could soon overshadow Europe’s once again.