Thanksgiving is not celebrated in Europe and Asia, but the impending holiday tends to have a becalming or calming effect on financial markets beyond North America.

It certainly looked that way today, with spreads trading in a tight range. The Markit iTraxx Europe recovered from earlier widening and by late afternoon it was unchanged at 78bps. The underlying conditions in the credit markets are positive - central banks remain supportive of risk assets and default rates are low for this stage in the cycle. It won't stay that way forever, but monetary policy in the world's major economies is set to be loose for some time yet.

Solid US housing numbers released today did little to change the consensus of a March taper for QE. The S&P/Case-Shiller Home Price Index showed that US house prices in September were up 13.3% compared with a year ago. But the data has a considerable lag, and it is likely that next week's jobs report is the only economic release that could shift QE tapering expectations.

Single names in Europe were little changed, with position squaring ahead of Thanksgiving the dominating theme. Italian bank Monte dei Paschi was in focus after its board approved a €3bn rights issue, which was first mooted two months ago. The proposed capital hike, which still has to be approved by shareholders, will shore up Monte dei Paschi's balance sheet and enable it to avoid nationalisation.

Unsurprisingly, the Italian bank's CDS spreads rallied on the news. They are now trading at 356bps, about 16bps tighter than yesterday and a big improvement on the 730bps seen as recently as July. In spite of this, Monte dei Paschi still has underperformed most of its peers in Italy and the rest of Europe, and its relatively weak capital position will probably see it continue trading at a risk premium.

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