Credit Update

Credit markets bounced with stocks.  We are seeing more and more evidence that treasuries are becoming the key to follow.  IG and HY both finished marginally better on the day, reversing earlier losses.  Credit managed to shrug off rating agency comments on German banks.  Both IG and HY are trading cheap to fair value and got very quiet during the bounce.  Feels like people are a bit too short these now but nothing major as it didn't feel particularly squeezy.  Europe is probably better near term short and it does feel like the bears are just as happy to be at holiday parties as the bulls and barring any significant news event we will bounce around with a fairly neutral bias until next year.