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A Dovish Hike in the US After A Hawkish Ease In Europe?

16 December 2015 by lberuti

After a six day losing streak, risky assets consolidated their fierce move over the last couple of days. They experienced a relief rally yesterday and stabilised today. That was certainly the case for credit indices, which were sticky around important strikes (80bps on iTraxx Main, 325bps on iTraxx Crossover and 90bps on CDXIG) of options maturing today. All eyes are now on the FOMC which is the only event left between now and the end of the year that can move prices significantly. But after recent news of redemption gates and liquidations among US and European credit funds which unsettled the market for a while, investors seem to have reached the conclusion that the FED will feel obliged to deliver a fairly dovish message should it hike rates tonight.