Debt gets Dumped

Debt across the board was hammered today. 19 out of 20 ABX indices fell to all-time lows. All 26 CMBX indices soared to record high premiums. Investment grade debt is priced at 0.95 on the CDX index, with junk bonds priced at about 0.88. Leveraged buy-out debt is in between at 0.92. Treasuries were pummelled as well. Both the ten and thirty year bonds fell about 1.3%.

Despite this, equities continued their divergence, with the DOW initially down almost 200, but recovering to about -50. The excuse for the 3:30 bounce was another (is this the seventh or eighth time, now?) deal in the works for Ambac.

I was down a small fraction of a percent overall today. I still have my four-day, fifteen point straight runup intact.

Even if the banks can come out with a legitimate bailout of Ambac, I still believe that the market will get creamed, and soon. If they bail out Ambac, their only source of good news will have flown out the window!