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A gauge of U.S. company credit risk rose for a fourth straight day, the longest streak since November, as traders responded to last week’s report showing employers added fewer jobs than economists had estimated in March.
The Markit CDX North America Investment Grade Index, a credit-default swaps benchmark that investors use to hedge against losses on corporate debt or to speculate on creditworthiness, climbed 1.9 basis points to a mid-price of 102.1 basis points as of 5:08 p.m. in New York, according to Markit Group Ltd. The index touched the highest level since Feb. 16, matching the longest stretch of increases since the period ended Nov. 17, when it climbed for four consecutive days.
The credit swaps index, which typically rises as investor confidence deteriorates and falls as it improves, climbed in reaction to a Labor Department report on April 6, a shortened trading day in the bond market, that showed hiring trailed estimates, casting doubt on the strength of the U.S. economic recovery. The payroll increase of 120,000 jobs was the smallest in five months.
Credit swaps 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.
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