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08 May 2017 by lberuti

Today was a classic example of “buy the rumour, sell the fact”. The market initially greeted the election of Mr Macron by opening iTraxx Main (ITXEB) a couple of bps tighter - it traded down to 61.5bps -, but it ran into a decent amount of profit taking across all European indices. To be fair, this phenomenon was not limited to credit, and most risky assets felt a bit soft in the afternoon. Eurostoxx traded off its highs, as did the Euro and peripheral rates, particularly BTP-Bund which closed the day 7bps wider on the back of early election noise. iTraxx Financials Senior still managed to slightly outperformed other indices – it closed 1bp tighter at 67bps while ITXEB closed unchanged at 63bps – and that was enough to confirm the outperformance of the European investment universe compared to its US equivalent. ITXEB has now closed the gap with CDX IG. While ITXEB was 10bps wider in early April, both credit indices closed at 63bps tonight.