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It Took only Two Days

24 January 2014 by HCM

If the market has been complacent since early December, that phase is now officially over. Serious questions have been asked about risk premia over the last couple of sessions, as cracks began to open in emerging markets. Flagship credit indices, the iTraxx Main and the CDX IG, are trading at levels last seen in early November 2013, even though investors have earned carry on their investments. Research pieces sent at the end of 2013, which became obsolete in 3 weeks as targets were already reached, will be worth revisiting. We shall see whether the next risk ramp-up will be as indiscriminate as what we have seen recently or if investors will be more selective this time around. This ramp-up phase might not happen immediately though, as the market still does not look very healthy. In any case, people will want to know what central banks decide next week, in the US and in Europe.