U.S. Sovereign Debt Credit Default Swaps Spike

The markets are panic-stricken that credit default swap risk is soaring for the southern European countries in 2010, but default risk is also spiking for U.S. Sovereign Debt.

U.S. Credit Default Swaps (CDS), as shown in the above Bloomberg screenshot, spiked significantly above its June 2009 high in February 2010.

Default risk is still well below the highs reached during the crisis, but we don't want to get anywhere near those levels again.

The trend, however, is now going in the wrong direction.