The ECB decision today will be the main focus as investors assess whether the central bank can maintain a relatively hawkish stance in light of growing data and event risk. Despite heavy volatility in European credit markets, sentiment finally stabilised during the US session once the market had fully digested yesterday’s news of Portugal’s ratings downgrade. Surveying the damage since the announcement we see that the euro fell 200 pips, Portuguese 10y yields widened about 180 bp, and other European sovereigns such as Ireland, Spain, and Italy also came under some pressure. Continue reading →