Anyone who is betting on failure, and is short risky assets, may face a short squeeze following the European bailout, says Richard Quin, managing director of global credit investment manager Bentham.

“The guys who were outperforming in August and September were likely short risky assets and long riskless assets such as U.S. Treasuries,” says Quin. “If you’re short right now you’re likely in the midst of a squeeze.”

The European bailout out agreed last week in an EU summit in Brussels may help Europe avoid a recession and re-capitalise European banks. U.S. third-quarter annualised economic growth of 2.5 per cent has also boosted investor sentiment.

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