CVA desks trim hedges as bailout crushes CDS spreads


A huge contraction in credit default swap (CDS) spreads kept credit valuation adjustment (CVA) desks on their toes yesterday, as traders found themselves losing money on overly defensive positions.

"People have been reassessing the situation and deciding whether they need to own the protection they've bought or not. It's cost them money over the weekend, but from a risk management perspective, if that's where their positions were, that was the right thing to do. As a bank, sometimes you have to

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