Forex News Cost of credit protection on Asian USD bonds drops in reaction to surge in U.S. stocks but CDS traders say they're not persuaded in the least that turmoil in credit markets is over; "this is just short-term," says HK-based trader. With U.S. economy squeezed ever harder by housing market decline, rising inflation, and rest of world sure to taste the fallout, traders says CDS will resume widening; "this is a bounce in a bear scenario. It's probably a short squeeze," says Manila-based trader. Markit iTraxx Asia ex-Japan high-yield 5-year CDS index quoted at 547-554 bps vs 564-570 yesterday, investment grade index at 147-149 bps vs 157-159 bps. Philippine 5-year CDS at 255-265 bps vs 264-268 bps same time yesterday, with expected 25bp rate hike by central bank later unlikely to rattle market, says Manila-based trader; adds can't rule out 50bp hike because central bank "is behind the curve." Pegs support for CDS at 250 bps, tips range of 250-300 over next month.
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