13 June 2018 by lberuti
If credit indices traded sideways over the first two days of the week, the tone certainly improved today. The sentiment in European market was risk-on, comforted by a solid BTP auction which sent the BTP-Bund spread below 230bps this morning. But ahead of the FED and ECB meetings, technical probably played their part as well. The DTTC statistics released today regarding positioning on credit indices showed a large increase of short risk positions during the course of last week. Large amounts of hedges were added across the board, and it looks as if clients felt the need to trim some of these going into the press conference of Mr Draghi. If the ECB delivers a somewhat dovish message and their meeting turns out to be a non-event, then current levels will be vulnerable, especially if Italy goes on the back burner for a while.