A gauge of U.S. corporate credit risk fell for a third straight day as investors await reports on consumer spending and jobless claims.
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 2.6 basis points to a mid-price of 85.4 basis points at 8:01 a.m. in New York, according to prices compiled by Bloomberg.
Investors are looking for signs of strengthening in the world’s largest economy to determine when the Federal Reserve will reduce the pace of its $85 billion monthly bond purchases, which has bolstered the credit markets. A Commerce Department report at 8:30 a.m. in Washington may show consumer spending rose 0.3 percent in May, according to a Bloomberg survey of economists. Initial claims for jobless benefits fell by 9,000 to 345,000 last week, a release from the Labor Department may 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.
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