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All Bulled Up

03 January 2017 by lberuti

First and foremost, the teams of Hellebore Capital and Hellebore Technologies both wish you all a Happy New Year!
As far as markets were concerned, 2017 experienced a much more positive start than 2016. There was no need to activate circuit breakers, no limit down on Chinese equities. It actually looked very much like a “risk on” start to the year, and equities and credit were trading up (i.e. risk premia were trading down) while interest rates were trading down (the Bund was the notable underperformer and lost more than a figure). It was allegedly a busy day in terms of credit linked notes issuance, which provided the market with a consistent stream of protection sellers, especially in the financial space. It was enough for the credit market to erase its end of year consolidation and it is now back to the tightest December levels. Investors have so far decided to ignore the note of caution sounded by a French investment bank, which forecast iTraxx Main and iTraxx Crossover to touch 120bps and 725bps respectively over the next six months…