European credit spreads widened on Tuesday, reflecting a more cautious mood among investors in spite of a rebound in US equities after steep falls in the previous session. "There are a lot of sellers of CDS (credit default swaps) so it's widened out," said one trader. "The equity market is not up much versus Monday. It doesn't feel like there is much to this equity rally."
By 1535 GMT, the investment-grade Markit iTraxx Europe index was at 116.50 basis points, according to data from Markit, 1.50 basis points wider versus late on Monday. The Markit iTraxx Crossover index, made up of 45 mostly "junk"-rated credits, was at 730.75 basis points, 20.75 basis points wider. Sentiment has become more downbeat this week, reflecting uncertainty about the strength of any economic recovery.
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