04 May 2018 by lberuti
Despite the stabilisation in US risk overnight, the early focus was on various bearish signs. Emerging markets were under fire as the USD remains strong, and clients and dealers alike got themselves short risk expecting a larger sell-off to follow in the afternoon. Financials – and more specifically banks – were pressured early on by poor results from SOCGEN ( Societe Generale SA ) and BNP ( BNP Paribas SA ). However, after an initial weakness in both credit and equities, we saw a decent turnaround for the affected banks, which saw their 5-year CDS trade off the widest levels. The same was true for the broader market. On the back of an NFP miss, and in the absence of further pressure on EM once the US came in, the usual path ahead of a 3-day week-end prevailed. CDS went from gold to dust, and the market did not even bother to attempt a tick wider at the end of the session.