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The Ukrainian Impact

03 March 2014 by HCM

Since the beginning of the year, European and US indices have moved in unison and their respective percentage moves have been tracking each other closely. It was a slightly different story today, with the perceived geopolitical risk escalation in Ukraine. Throughout the day, the market was told of Russia’s growing military presence in Crimea. This eventually led to a significant underperformance of European Indices compared with their US equivalent. The spread between the iTraxx Main Europe and the US CDX IG, the two investment grade benchmark indices, is close to 10bps, which close the widest level of the year reached in late January when risk premia were hit by Emerging Market jitters.