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Done And Dusted?

20 June 2016 by lberuti

Given today’s price, you would be forgiven for thinking that the EU referendum was done and dusted. iTraxx Main (ITXEB) opened 5bps tighter this morning compared with Friday’s close, as the British Pound staged an impressive rebound against the US Dollar overnight, trading up four handles from 1.43 to 1.47. Risk premia continued to drift tighter during the session and ITXEB closed 7bps tighter at 78.5bps. Recent underperformers were today’s best performing assets. ITXEB is now 1.5bps than CDX IG in the US (from 3bps wider on Friday) and 5 year CDS in the financial sector moved indiscriminately tighter. It is difficult to say whether the magnitude of today’s move was more indicative of the amount of short risk positions that had been amassed, or of the lack of liquidity. In fact, at current levels, credit has probably regained a bit more symmetry whether we Bremain or Brexit.