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Time To Buy Gamma?

07 November 2016 by lberuti

It was a strong start to the week as we learned over the week-end that FBI Director James Comey decided that Mrs Clinton should not face criminal charges related to use of a personal e-mail server while she was secretary of state. It put an end to the review of newly discovered e-mails announced 10 days ago which breathed new life into Trump’s candidacy. The odds of a Clinton’s victory now stand at 83% with bookmakers. The impact on markets is positive as they reckon this scenario would bring less uncertainty than Mr Trump becoming president. It also led to an outperformance of US credit indices compared to their European equivalents. iTraxx Main and Crossover closed 2bps and 12bps tighter at 74bps and 326bps respectively, while CDXIG and CDXHY closed 3bps and 17bps at 77bps and 414bps. There is still some way to go before credit is back to the tightest levels of the year though, as some big hedge funds are reported to maintain some hedges in place until the final results are known. Depending on the outcome, there is still some room for a move one way or the other.