Credit Swaps in U.S. Decline Before GDP, Jobless Claims Reports

A gauge of U.S. corporate credit risk declined before reports on unemployment and growth in the world’s biggest economy.

The Markit CDX North American Investment Grade Index, a credit-default swaps benchmark that investors use to hedge against losses or to speculate on creditworthiness, decreased 0.7 basis point to a mid-price of 76.2 basis points at 8:03 a.m. in New York, according to prices compiled by Bloomberg.

Investors are looking for signs the economy is recovering, boosting confidence that companies will be able to repay their debts. The U.S. economy probably grew at a 2.5 percent annualized rate in the first quarter of this year, the same as estimated last month, economists forecast before revised data from the Commerce Department at 8:30 a.m. Initial jobless claims, due from the Labor Department, were probably unchanged at 340,000 in the week ended May 25, estimates show.

The credit-swaps index typically falls as investor confidence improves and rises as it deteriorates. The contracts pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.

To contact the reporter on this story: Victoria Stilwell in New York at vstilwell1@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

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