Halister News

(Bloomberg) -- Global credit markets are expected to follow overnight moves in FX, equity and govt bonds into weakness after the U.K. voted to leave the EU. Synthetic indexes marked sharply wider in early quotes, Bloomberg strategist Simon Ballard writes.

• iTraxx Crossover currently indicated 437.19 mid (+115bps); iTraxx Main shown at 103.90 (+28.8bps), biggest percentage move since June 2004, Bloomberg data shows
  • Liquidity likely to be non-existent in cash bond mkt this morning as spreads get marked sharply wider across the quality curve with investors sidelined
• Broad risk off, spiking volatility, will impact across credit markets; GBP risk assets likely to underperform near term
  • Pre-referendum rally in corp credit risk expected to be swiftly reversed when market opens; Brexit was on radar, but ascribed decreasing probability in recent days
  • EUR-denominated risk asset pricing may come under pressure as focus shifts to Spanish elections Sunday which may carry additional risks after U.K. vote result and other potential votes being called elsewhere

• NOTE: Simon Ballard is a credit strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.