17 April 2015 by lberuti
Today was a weird trading session. It begun with a blackout of all Bloomberg terminals which lasted almost all morning and put trading on CDS to a halt. Then around noon all risky assets nosedived without any one able to provide really convincing explanation. When it happened everyone thought Greece, but no new news was available on this front, and people were left with a tightening in trading rules by the Chinese regulators which sent Chinese equity futures tumbling as the only plausible cause. In any case, the last 2 sessions have rocked investors’ boat and even if there was no panic, hedges were put in place, and as is customary in the world of credit, indices were bought “en masse”. That caused a fierce move wider of all the liquid indices, while single names were not the primary focus today. They will play catch up next week, but the obvious result today was bases trading firmly in positive territory across the board. Even the iTraxx Crossover index, which, over the last 6 months, had developed a habit of trading at a tighter risk premium than its theoretical value, joined the positive basis crowd.