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Waiting For Mario?

10 November 2017 by lberuti

At the European open, it seemed as if we could be in for a spell of volatility. The names which had been the weakest over the last few sessions were even weaker, and it spilled over into indices which went through their recent widest levels. But as iTraxx Crossover reached 250bps and bearishness was at its highest, High Yield stocks stabilised mid-morning. Flows on credit derivatives felt much healthier all a sudden as some profit takers stepped in and begun to sell protection on single references and on indices alike. It was enough to stop the rot on the names that felt the most toxic - for instance ASTIM (Astaldi) finished unchanged while it was 8pts wider at some stage -, but the list of laggards among index constituents still outnumbered the list of winners. At the closing bell, the fair values of European indices were still wider on the day. Indices, for their part, were tighter across the board, but at this stage it appears mainly down to the belief that the ECB will be back in the frame before we know it.