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Daily Archives: 9th May 2019

9th May 2019

Still a game of chicken

MARKET CLOSE:
iTraxx Main

67.3bp, +4.8bp

iTraxx X-Over

283.2bp, +16.2bp

🇩🇪 10 Yr Bund

-0.05%, -1bp

iBoxx Corp IG

B+131.6bp, +3.3bp

iBoxx Corp HY

B+433bp, +8bp

🇺🇸 10 Yr US T-Bond

2.45%, -3bp

🇬🇧 FTSE 100

6144.25, (+1.26%)
🇩🇪 DAX

11657.69, (+1.33%)
🇺🇸 S&P 500

3036.13, (+0.74%)

Market vulnerabilities boost primary credit…

Just when we thought that markets ought to have been ripping higher/tighter – equity/credit spreads – they’ve come unstuck following those tweets from the President. Just about everything in terms of market direction for May and June potentially hangs on the outcome of the talks currently underway, and we can safely assume the markets will receive a running commentary on their progress. This President isn’t one for the usual protocols. That means the edginess besetting the markets this week is unlikely going to fade and we will stay vulnerable to further weakness.

In credit, investors will just remain sidelined in secondary but primary, which was very light over the past 3 weeks – and prior to this week’s tweet storm, was much less gloomy in the session. That ought not to have been the case as lower levels of confidence might have kept borrowers sidelined. But no. We were spewing out (IG non-financials and other) deals leaving us with the sense that borrowers were getting deals away before markets deteriorated more! Furthermore, there’s obviously much more business to get done judging by the swathe of mandates announced in the past couple of sessions.

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