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Lost For Direction

10 December 2018 by lberuti

Today’s session was weak and driven by macro news. Risky assets were indicated lower at the end of the Asian session following the arrest of a senior executive of Chinese telecom equipment maker Huawei, which is suspected of trying to evade US trade curbs on Iran. That led to a very cautious open. Rumours that the vote on the Brexit deal due in the UK Parliament on Tuesday would be postponed only added to uncertainty. Effectively, faced with the possibility of an embarrassing defeat of her Brexit deal, Mrs May announced in the afternoon to the House of Commons she would defer the vote and return to Brussels to seek “assurances” from European leaders. The words of the embattled UK Prime Minister signalled she does not expect much of the substance will be changed though, and she failed to reassure on the probability of seeing a deal going through as it raises the prospect that she will be back in January with virtually the same deal. So much uncertainty is leaving many credit investors on the side-lines. Increasingly illiquid and jittery, the credit market appears to be in follow rather lead at the moment, and it looks likely that it will go up and down looking at the S&P in the coming days and weeks.