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Panic? "Oxi" Says The Market

06 July 2015 by lberuti

Even though the outcome of the Greek referendum was said too close to call on Fraiday, most people were actually expecting the “yes” would prevail. And in any case, no one expected the “no” to win with such a comfortable margin. So barring the early wide prints on iTraxx Main (ITXEB at 81bps) and iTraxx Crossover (ITXEX at 350bps), the market was extremely well behaved. Given the magnitude of the news, the trading ranges were minimal (2bps on ITXEB and 10bps on ITXEX). The different indices also reacted according to their respective beta, which was certainly not what people expected. It is also worth noting that bases are closing at levels which are largely unchanged across the board. Market participants seemed happy enough with the news that Mr Varoufakis is no longer Greek finance minister, and decided not to focus on the longer term risk of political contagion to other countries. They will probably react should progress on a deal falter this week though.