Are Aussie iTraxx trades the right hedge?

On the right iTraxx?

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On the right iTraxx?

If you take the word of the credit default swap (CDS) market, Australia’s companies were roughly one-quarter riskier on July 12 than they had been on May 2, following an eye-catching surge in spreads, notionals and trading activity on Markit’s iTraxx Australia credit index. But dealers warn against taking this activity at face value: some say the index is being used to hedge exposure to China, while others say it’s tied more to the eurozone’s sovereign debt woes. Still others try to bridge the d