Goldman Sachs 5 Year CDS Spike

Although we saw parabolic spikes in several primary dealer CDS 5 Year instruments during trading today, Goldman Sachs stands out as the most expensive to find a counterparty for... Insiders appear to be, at best, pricing for an imminent rating downgrade from Moody's for Goldman Sachs (as well as potentially BofA and Citi). This is not incredibly surprising given that we know that with a VIX level of 52+ likely 100% of vol-sellers are blown out at this point and now the dealers are operating in an environment where the major indexes are seeing their components converge towards a 1 correlation and major price gapping. This creates immense pressure for Goldman Sachs and others to hedge. All of that said, these charts say that swaps market participants are balking at the risk levels at Goldman and other G-SIBs at this point. We can confirm that by looking at reverse repos at the NY fed, where we see that funds and smaller banks are rapidly shifting excess cash out of those institutions and into the Fed instead.

ETA: This group does not allow me to share the image directly from terminal for the Goldman Sachs CDS 5 Year chart through today, so I am linking it here with a workaround from TradingView. https://invst.ly/19xv0w