Stock Traders Stay Calm About US Being on Cusp of Default
- Credit default swaps are spiking as the VIX stays unchanged
- Rout could create buying opportunity if debt deal struck: Citi
The debt-ceiling standoff in Congress has the US at risk of being unable to pay its bills as soon as June 1. You’d think stock-market investors would be anxious about the uncertainty — but you’d be wrong.
While hedging activity is picking up on the fringes, there are few signs of panic. Expectations for price swings in stocks most sensitive to a government default still hover near a two-year low. The S&P 500 Index slid 0.3% this week and the Nasdaq 100 Index rallied 0.6%. And a measure of market risk, the Cboe Volatility Index, or VIX, dipped back to near a 17 level.