This CDS report was written by Markit’s Gavan Nolan
The Markit iTraxx Crossover index tightened below 1,000bp for the first time since the beginning of December in a broad-based rally. Investment grade names also performed strongly, with the Markit iTraxx Europe index tightening by over 10bp to trade at 167bp. All but six of the underlying constituents rallied, with energy and retail among the outperforming sectors.
Energy credits were boosted by the price of oil exceeding $50 a barrel, though it has since retreated. Natural gas prices have also risen. The escalating conflict in the Gaza strip has pushed prices higher, as have expectations of an OPEC production cut. The ongoing dispute between Russia and Ukraine has put upward pressure on natural gas prices. Oil producers across the globe, such as France’s Total and ConocoPhillips in the US, rallied. However, favourable geopolitical developments could take some stem out of the commodities rally and curtail spread tightening in energy names.