European credit spreads were tighter on Friday, partly in response to a firmer tone on equity markets after the International Monetary Fund saw signs that the decline in global output was moderating. By 1522 GMT, the investment-grade Markit iTraxx Europe index was at 119.22 basis points, according to data from Markit, 3.78 basis points tighter versus late on Thursday.
The Markit iTraxx Crossover index, made up of 45 mostly "junk"-rated credits, was at 739.25 basis points, 4.75 basis points tighter. A strong rally in credit spreads has stalled this month on uncertainty over the strength and sustainability of any economic rebound. "Some are professing to this being the end of the great tightening run credit has enjoyed since mid-March," said Societe Generale credit analyst Suki Mann in a note to investors.
But Mann said the tightening trend was not at an end. "The general trend is and will be to go tighter, but straight-line tightening economics will unlikely be revisited with such gusto through the more quieter, liquidity and turnover starved summer months," he said.
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