Tuesday's market event

baby_boomer

Telegraph

Markets hold breath as $360bn Lehman swaps unwind

The $54trillion credit derivatives market faces a delicate test as $360bn worth of contracts on now-defaulted derivatives on Lehman Brothers are due to be settled on Tuesday.

If this goes smoothly, the uncertainty about the other derivatives contracts may ease and the markets may breathe a huge sigh of relief.

On the other hand, if there a casualties from the unwinding, the market could go the other way.

The uncertainty about these contracts is huge and has contributed to the market meltdown and the collapse of bank & insurance shares. Are they worth it - apart from the profits they earn bankers? Will governments want or dare to regulate to severely restrict their use?

Telegraph - Worldwide Markets have rallied on hopes that the bail out is working, as the interbank lending rate has started to drift lower

Watch the Tuesday's FTSE100 performance as it unfolds on the graph below

Yahoo link to FTSE chart

baby_boomer

The FTSE100 was initially up 1% and then dragged 1% lower by a disappointing Wall Street,

But no blood on the streets AFAIK. So that's good .

Hopefully a small step on the way to stability?

On the other hand - it could just be that the results of the trades are going to be kept secret until the companies involved have to publish their next set of results.

dunstonh

We want days of little trade and little volatility. Thats a much better sign that things may be past the worst than sudden bounces upwards.

Tomorrow the FTSE100 should be around 1% down because a number of companies go ex-d. However, that ignores other events which could offset or increase that.