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Daily Archives: 10th February 2019

10th February 2019

It was just too good a thing

iTraxx Main

74.2bp, +1.2bp

iTraxx X-Over

319.9bp, +2.5bp

🇩🇪 10 Yr Bund

0.09%, -3bp

iBoxx Corp IG

B+155.7bp, +2bp

iBoxx Corp HY

B+491bp, +6bp

🇺🇸 10 Yr US T-Bond

2.63%, -2bp

🇬🇧 FTSE 100

6176.19, (+1.33%)
🇩🇪 DAX

12799.97, (+1.32%)
🇺🇸 S&P 500

3185.04, (+1.01%)

Squeaky bum time, again…

Approaching the half way point for the month and we find that credit spreads have performed better than even the most bullish of expectations. OK, there are still almost 11 months to go and the macro risks are building, but we have some good performance in the bag to help alleviate some of the inevitable weakness and/or pain to come. The situation is complex for us as we need to consider a number of factors. Macro weakness can be a concern from the impact it might eventually have on corporate fundamentals. However, we forgive some weakness because the subsequent low rate regime entices us to add corporate credit risk for the yield pick up sorely needed in order to generate performance. That push-me-pull-you like technical/fundamental dynamic works a treat while equities don’t show much weakness. As soon as equities tank (like they did last Thursday), then credit inevitably weakens.

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