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Squaring the Circle

24 February 2015 by pdonnat

From US to Europe, the various parties achieved to deliver the market expectations. All assets are performing : the CDS are closing tighter, the treasuries higher like the stock market. Over the week, the spread tightening is close to the perfection. On this Grapple, all bubbles are aligned. The CDS tightening is proportional to the CDS level. This is a clean homogeneous risk premium compression in the European credit market. We can wonder if this is completely rational. But, as far as we can understand, the Eurogroup has achieved squaring the debt’s circle with the Greek government. So, why the bubbles couldn't be aligned again the next trading sessions?