05 July 2016 by lberuti
After last week’s rally, investors have been happy to let some protection go in the consolidation that took place over the last couple days. They have used this pop wider to lighten up hedges on iTraxx Financials Senior, iTraxx Main and iTraxx Crossover. But what is true for credit indices appears less obvious on single name CDS, and some compartments of the market have been put under pressure. The reach for protection that started on Italian banks yesterday spread out to other peripheral names and UK institutions. In fact, everything related to the UK saw its risk premium increased today as uncertainties associated with Brexit came back with a bang. Following the English pound which touched new lows against most currencies, all UK names were indicated wider. So much so, that index bases have resumed their march into negative territory on European indices across the board.