19 October 2015 by lberuti
Investors’ take on the market is fairly sanguine at the moment. That sentiment got an additional boost overnight with reports that the Chinese economy is slowing less than people feared. But it essentially feeds on the upcoming ECB meeting on Thursday, as the latest instances have not disappointed the market once in recent months. Expectations that Mr Draghi will deliver a dovish message are certainly high and credit indices are well offered across the board. They are now reaching levels that have proven resistant since mid-August, particularly iTraxx Main (ITXEB). Indeed the roll between series 24 and series 23 of ITXEB is worth 6bps, so today’s close of 78bps is only a couple of bps away from the 70bps level on which series 23 bounced repeatedly towards the end of the summer. That is why people generally expect the market to trade sideways during the next few sessions. We shall see whether the ECB gives the market the impetus to go through these technical levels or if credit risk premia decide to bounce of them.