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Daily Archives: 28th February 2019

28th February 2019

No Stopping the Easy Carry Business (ECB) | Bank Capital Insights

Carry on TLTRO – The show must go on

It seems that market participants are placing more and more confidence that the ECB will announce a new fixed TLTRO program next month. That will mean credit supply to the EZ economies will continue unabated and counter any economic slowdown, with the biggest beneficiaries of the new program likely to be the peripheral banks, especially the Italians.  Credit investors are now getting used to the never-ending easy monetary policy accommodation and getting forced to move into riskier parts of the capital structure.

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28th February 2019

More of the same will do nicely

MARKET CLOSE:
iTraxx Main

61.2bp, -0.3bp

iTraxx X-Over

276.0bp, +2.1bp

🇩🇪 10 Yr Bund

0.18%, +3bp

iBoxx Corp IG

B+145bp, -1.5bp

iBoxx Corp HY

B+448bp, -3bp

🇺🇸 10 Yr US T-Bond

2.72%, +3bp

🇬🇧 FTSE 100

7409.13, (-0.58%)
🇩🇪 DAX

13744.21, (-0.01%)
🇺🇸 S&P 500

3380.16, (+0.18%)

Feeling replete…

We closed chapter two on a slightly sour note with no further breakthrough on the US/North Korean talks, amid data from China showing that the manufacturing sector continued to contract for a third consecutive month. But we’re in no mood to let that detract from what has been a very positive start to the year – and better than what most investors could have expected. When equities in Europe rise by 5%, by over 10% in the US and IG credit in Europe delivers total returns closing in on 2% – with high yield at almost 4%, we have to extremely satisfied. It’s early days of course and last year’s more difficult period is still fresh in the mind, but we have bagged some good performance as we ready for some testing times ahead.

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