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Back With A Vengeance

19 April 2016 by lberuti

The failure of the Doha meeting seems a distant memory. For the second day in a row, credit was stronger across the board amid a rise in risky assets and further increase in crude oil prices. Metals were also in better demand with Copper in particular reaching a 3-week-high. Despite some mixed results since the beginning of the reporting season, investors seem to believe we will see increased demand from a growing global economy, which should benefit from a stabilisation in China. The recession talks from February appear to be over, and all of a sudden, companies that everybody loved to hate are back with a vengeance. Over the last couple of sessions, people have been scrambling to exit short risk positions in the basic material and energy sectors, making them outperform the rest of the market by a mile. To name a few, the risk premium of FCX (Freeport McMoran) was 190bps tighter today (and 489bps tighter in a week), RIG’s (Transocean) was 387bps tighter (408bps in a week) and TCKBCN’s (Teck Resources Ltd) was 287bps tighter (and 560bps tighter in a week)