BMO Finds An A New Source Of Systemic Risk

In a time of suffocating, crushing market complacency (which has made the lives of financial analysts so boring, they have even quantified what complacency is), a pet hobby that has emerged within the financial community is to find new possible sources of underappreciated systemic risk. One such attempt comes from BMO’s Mark Steele today, who notes that aside from the pressure that the short to medium end of the curve is dishing out as Central Banks turn hawkish, “the market dishes out some of its own early signals of a more important nature.”
Steele says he created a basket of Chinese Bank CDS to look for systemic risk there, and yesterday it notably broke above a narrowing trend – Exhibit 1.

This post was published at Zero Hedge on Jul 6, 2017.