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Everybody Out Of The Pool!

01 April 2015 by lberuti

Looking at the daily variations of credit indices on both sides of the Atlantic will give you the impression of another subdued trading session. Ahead of the long week-end, this actually what it was for most of the time. Early in the afternoon though, investors had a glimpse of what could lie in store if/when the tone escalates further between Greece and its creditors. When news hit the tape that Athens would not repay an IMF loan due on April 9th if lenders failed to send them further funds, iTraxx Main gapped 2bps from 55.5bps to 57.5bps and iTraxx Crossover gapped from 259bps to 265bps in the blink of an eye. This was swiftly denied by the Greek government and indices subsequently retraced a good portion of this panicky move. Nevertheless we have been warned of the potential effects of the combination of the likely thin liquidity around the Easter break and the unpredictable newsflow.