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Brutally Slow

31 May 2017 by lberuti

Greece allegedly threatened to opt out of their next payment without a deal with their creditors. Renzi and Grillo agreed to call for early elections in Italy. Labour are closing the gap with the Conservatives in the general election taking place in the UK next week. Bank Of America and JPMorgan gave revenue updates which pointed towards decline in second-quarter trading revenues of at least 10%. Oil dropped another 3% as questions keep being asked regarding the effectiveness of the OPEC measures to reduce stockpiles around the world. Investors could have plenty of reasons to be cautious going into next month and take chips off the table. We saw none of that in the credit market today, and, if credit indices have stopped tightening, their risk premia are not widening. They have been stuck in a very narrow range – over the last week, the pick to trough variation of iTraxx Main and CDXIG is less than 1bp and the pick to trough variation of iTraxx Crossover and CDXHY is less than 5bps -. The typically thin liquidity of a shortened week has not been used to push them around.