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Aspirin for everyone

30 June 2016 by pdonnat

Just after London close, the BoE signaled rate cuts over the summer. At the same time the ECB announced it was looking at increasing the pool of QE eligible assets as the Brexit is depleting the asset pool. Central banks are using the usual pills to calm the market fever. Post London closing credit index are squeezing much tighter and the iTraxx Europe credit index is now only 5bps wider than its pre-Brexit levels trading at 80bps. Brexit chaos looks like a Brexit cough, far away from the state of mind of most European citizens apprehensive about their future. Credit shorts had a short glory and credit long had a long stress over the last seven days. The risk management of this week where large volumes of credit derivatives indices have traded will be decisive for the year performance.