Credit spread widening fails to generate buying interest

Despite spreads widening last month to more attractive levels, investors remain cautious on expectations of a prolonged period of volatility for the credit markets.


After being blown sky high by the political mishandling of the Eurozone’s deficit crisis, the pieces are still coming down in the credit market. Risk reduction has further to run, according to credit traders, following the waves of volatility that pummelled markets last month.

While buying interest returned following earlier sell-offs this year, this did not translate into firm bids. In fact, trading activity remains mainly focused on hedging or selling into any strength that materialises.


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