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They Did It Again

18 June 2015 by lberuti

If you just browse through the closing levels of credit indices, you will discount today's session as another day for (almost) nothing, bar a bit of compression. But that does not tell the whole story, as there was a fairly uncomfortable moment when index widening felt unstoppable. At the end of the European morning session, iTraxx Main went from 77bps to 80bps in flash, iTraxx Crossover from 335bps to 350bps and iTraxx Financial Senior, which felt the most vulnerable of all, from 92bps to 99bps. It took a rumour regarding some debt relief offered to Greece to stop the rot and credit is closing unchanged across the board, single names and indices alike. Some were hoping that the brief spike wider was the capitulation the market needed before it can take a leg tighter. It actually never quite felt like the end of the world, so we might go to new wides before the rally can begin in earnest.