U.S. Corporate Credit Swaps Decrease Before Jobs Report ReleaseScott Harrison
A gauge of U.S. corporate credit risk fell as investors await a report that may show the unemployment rate fell last month.
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 1.6 basis points to a mid-price of 82.4 basis points at 7:57 a.m. in New York, according to prices compiled by Bloomberg.
Investors are looking to the Labor Department report to assess the strength of the economic recovery and determine when the Federal Reserve may trim its $85 billion of monthly bond purchases. The 8:30 a.m. release in Washington will probably show that the U.S. unemployment rate fell to 7.5 percent in June, matching its lowest level since 2008, according to economists surveyed by Bloomberg. Payrolls grew by 165,000 workers, after rising 175,000 in May, the median of 91 projections shows.
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.