Today's Major Market Move: Italian CDS decline 17.9% This Week.

Today we're going to take a look at how this week's series of interventions ( on Monday: the latest iteration of a European bailout proposal, on Wednesday: dollar swap price reduction and lowered reserve requirements for Chinese banks) have impacted the credit default swap landscape. Here's the performance of sovereign CDS since Sunday:

Click to go to the live table.

Bear in mind that CDS prices are an indicator of default risk so the lower the price, the lower the risk of default (i.e it's good). These are significant moves and were exactly what the central bankers and European politicians were hoping to achieve. Now the question switches to follow through and the sustainability of these moves. As I've said in many weekend posts (or at least the thought has entered my mind): "Next week is going to be interesting."

Although Italy was 11th on the list, I chose to focus on them because they are the elephant in the room. Italy's debt is 40% bigger than the rest of the PIIGS combined. They are un-bailout-able by anyone other than an organization possessing the ability to generate money out of thin air (read: central bank). What prevents a central bank from firing up the proverbial presses? The price of oil. $100 per barrel of WTI still leaves room for action; $150 per barrel means the CB's have to think about hiking regardless of whatever else is happening in the economy. $150 per barrel (which translates to about $5 at the pump) causes the all important U.S. consumer to go into shutdown mode. As was noted in this post, back in the crisis of 2008/2009 the Fed hinted at hiking, and the ECB actually went through with it. In this humble blogger's opinion, the primary, if not sole, reason for that hawkish shift in attitude was the price action in oil.