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’The CMBS crash
The graphs really say it all.
From Markit, below, are a selection of graphs showing the performance of the CMBX index. The CMBX in an index of CDS written against commercial mortgage-backed bonds. Thus the higher the spread on the CMBS,
Terpology
Here’s one, rather immediate, consequence from Paulson’s changing of the Tarp yesterday.
The decision not to use taxpayer funds to mop up illiquid mortgage assets resulted in this market reaction: ABX indices (based on CDS for tranches of subprime mortgage-backed securities) unsurprisingly cliff-diving,
Subprime CMBS
CMBS has long been speculated about as the next mortgage-backed penny to drop. Until recently, though, prices have -relatively speaking – held up quite well.
Here, however (HT Calculated Risk) is the latest CMBX chart from Markit (AA series 5):