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Nothing Separates Them

26 May 2017 by lberuti

It is a Friday. Large parts of Europe were basking in the sun yesterday enjoying a day off, something that eventually appeared to stretch into today as many people did not bother to come in the office. The UK (Spring bank holiday) and the US (Memorial Day) will be off on Monday. That could only mean one thing: a subdued trading session. That is exactly what we got. It was slow, with very little volatility. In that respect, it mirrored the credit market’s behavior since the beginning of the week and effectively since the beginning of the month. It felt firm and outperformed equity markets. The outperformance of iTraxx Main compared with CDX IG is the other takeaway from May so far. The European investment grade benchmark has closed the gap with its US equivalent and it is quite remarkable that the 2 indices have closed at the same level – give or take 0.25bps – each day of the past fortnight.