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Combining Volumes and Volatility

29 January 2014 by HCM

Today’s close to close move is hardly a fair reflection of the volatility the market experienced. Credit has visited both ends of its new found trading range. For instance, Itraxx Main opened at 77bps, traded all the way up to 85bps, before settling at 81.75bps. Credit recently proved much more volatile than most other asset classes - except the Turkish Lira of course - . Interestingly, this volatility took place with heavy volumes going through, especially over the last week or so. The intense activity of Thursday and Friday last week was enough to bring last week’s volumes 25% above what they were a year ago on credit indices, and 50% higher on single names. That trend only amplified since Monday with more investors putting hedges on or off. If you are looking for a volatile asset class where you can implement your views in decent size, look no further than the CDS market.