21 November 2016 by lberuti
Thanksgiving is 3 days away, and this week will effectively be a 3-day week. So no-one really expected a bumper session in terms of trading and the fact that the week-end brought an array of “positive” political headline did nothing to upset that view. In Germany, incumbent Chancellor Angela Merkel announced she will be running a fourth term in the election next year. This should not have come as a major surprise, but having the confirmation is always useful. Meanwhile in France, the first round of voting for Les Républicains’ (French moderate right wing party) candidate in next year’s presidential election was held. François Fillon was the surprise front-runner, with 44% of the votes, followed by Alain Juppé (28%) and Nicolas Sarkozy (21%). The second round will take place next Sunday between Fillon and Juppé. From a market perspective, both candidates stand a better chance of beating far right leader Marine Le Pen than Sarkozy – it is widely expected the Les Républicains candidate will face off against Le Pen in the second of the presidential election – and should be able to establish a stable majority in the lower house. If you add a stabilisation in interest rates, it is easy to understand why credit indices traded in extremely tight ranges (81-82 for iTraxx Main; 75-76 for CDXIG; 343-348 for iTraxx Crossover) at slightly tighter levels than Friday, in volumes that were roughly 25% lower than their 20-day average.