22 September 2015 by lberuti
Not many saw that straight line sell off coming. There was a tame attempt intraday around noon to turn the tide, but once the US came in, it was “run for hills time” as a market participant put it, and the widening carried on into the close. Given the velocity of the move, there won’t be too many people taking the other side of the trade yet and no one will rush into a long risk position. Credit was weak across the board, but the names that were the most affected are the names that were already under pressure. For instance, it is likely that a few investors who tried a “long risk autos” yesterday got spooked by the resumption of the widening trend today and threw the towel. VW closed another 85bps (!!) wider at 221bps, and dragged all the auto sector in its wake. Commodity related names and utilities, which already had a tough summer, also had a torrid session.