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Daily Archives: 9th January 2019

9th January 2019

Happy New Year?.. Oh yes!

iTraxx Main

82.9bp, -2.9bp

iTraxx X-Over

335.4bp, -10.2bp

🇩🇪 10 Yr Bund

0.22%, -1bp

iBoxx Corp IG

B+179.8bp, -1bp

iBoxx Corp HY

B+516bp, -10bp

🇺🇸 10 Yr US T-Bond

2.73%, +1.5bp

🇬🇧 FTSE 100

6036.00, (+0.05%)
🇩🇪 DAX

12600.87, (-0.36%)
🇺🇸 S&P 500

3306.51, (+0.10%)

Ain’t no stopping them…

Another solidly positive session, leaving risk assets continuing with their rally. Who would have believed the Dax being up 3% already this year, especially given all the fears we have of a mounting slowdown in macro? The US/China trade talks reaching some kind of an agreement is the sole driver, because all the data suggests Germany and the Eurozone overall is slowing – and heading potentially for recession. The FTSE likewise is close on 3% higher in these early bulled-up sessions, but the hopes here are for one of a Brexit trade deal, no Brexit or a delays to Brexit which might lead to no-deal. Better the devil you know keeps the market buzzing along.

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9th January 2019

Food for Thought Idea in USD AT1 Land | Bank Capital

HSBC 6% Perp 27 AT1 looks very attractive relative to STANLN 6.5 Perp 20 AT1

Macro background:

  • USD swap rates continue to widen especially in the front end and we continue to see the curve flattening
  • Global growth is slowing down but with potential sticky inflation (oil/commodities driven). Trade wars, protectionism and increasing geopolitical risks are going to create volatile moves in markets
  • EM currency and hard currency debt is coming into focus given the record level of issuance in recent years
  • Repricing risks in new issues and new issue markets being shut
  • Potential end of global easing and accommodation
  • Diminishing appetite for risky assets

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