Nomura Asset Management’s Richard Hodges began the year by buying credit default swaps, worried that rate cut bets were becoming too aggressive. He reduced the hedge when the cost of protection increased, and now stands ready to dip in again. He’s among money managers using CDS indexes to insure against the pain that could be unleashed if central bankers fail to deliver what bond traders have already priced in for the year. For these investors, moderating expectations on rate cuts will boost government bond yields, which would in turn hit spreads on corporate debt. But instead of selling bonds that could be harder to ... (full story)