18 June 2014 by HCM
No one really expected a bumper day in terms of activity ahead of the FOMC tonight, and we effectively got a fairly quiet session. The trading range was very narrow on indices, with most of the activity concentrated on Main on the back of option expiry. Nevertheless the tone was supportive across the board and with the roll in a couple of days, protection was slightly better offered on most of the names. There was one sector under pressure though, as airlines’ risk premia are all closing wider on the day. This a trend that actually began a week ago with the consolidation of the market. But it also coincided with the escalation of armed clashes in Iraq which have pushed crude prices 5% higher. High yield air carriers are price takers as far as oil is concerned, and the credit market is singling them out as the most vulnerable.