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Daily Archives: 9th December 2018

9th December 2018

Winter of discontent ahead

MARKET CLOSE:
iTraxx Main

85.2bp, -2.6bp

iTraxx X-Over

342.1bp, -8.1bp

🇩🇪 10 Yr Bund

0.25%, +3bp

iBoxx Corp IG

B+175bp, unchanged

iBoxx Corp HY

B+519bp, unchanged

🇺🇸 10 Yr US T-Bond

2.86%, -2bp 

🇬🇧 FTSE 100

6049.62, (-1.73%)
🇩🇪 DAX

12489.46, (-0.04%)
🇺🇸 S&P 500

3152.05, (-0.65%)

Suspicious minds…

The attempt at a ‘recovery’ in last week’s final session in the European session was so limp that it was barely worthy.  Later, the US sell-off put paid to any sustainability of it. It actually highlights a nervous market now facing a daunting outlook just as we near the end of this year’s business and head into 2019. By all accounts, ‘mediocrity’ in performance/returns next year will be a good result. If equities can add 5% say, great. If credit can post positive returns, super. If government bond yields rise it means we have some kind (or hope) of economic recovery, excellent. That’s about as bullish as one can get at this point.

Fireworks might still go off in Sino/US relations. Brexit is on the road to nowhere (ie., no deal). Italian/EC budget event risk lurks and we have all manner of geopolitical skirmishes threatening to get out of control. This means that equities might drop some more next year, credit returns could be negative again and rates might fall even further.

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