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13th May 2019

Never surrender

MARKET CLOSE:
iTraxx Main

68.3bp, +2.4bp

iTraxx X-Over

290.2bp, +10bp

🇩🇪 10 Yr Bund

-0.07%%, -2bp

iBoxx Corp IG

B+134.7bp, +3bp

iBoxx Corp HY

B+439.4bp, +8bp

🇺🇸 10 Yr US T-Bond

2.40%, -5bp

🇬🇧 FTSE 100

6144.25, (+1.26%)
🇩🇪 DAX

11657.69, (+1.33%)
🇺🇸 S&P 500

3036.13, (+0.74%)

Time to be afraid…

That’s better! We can at least explain the market moves in the week’s opening session. The weakness across all risk asset classes was down to concerns about the lack of a trade deal and the implications and ramifications for growth if one isn’t eventually reached. Global growth coming in at over 3% for 2019 is at the mercy of an agreement.

Trump might have been playing the tough guy, but the Chinese hit back vowing to ‘never surrender to foreign pressure’. It’s going to get more interesting now following initially a fairly stern and clear (official) riposte from the Chinese through official news media which elicited a measured market response. But then came the expected retaliatory tariffs of between 10% – 25% on $60bn worth of goods, leading to a mini-rout in risk assets.

Emerging market equities and currencies took it on the chin with the former seeing them all lose over 1% and the latter all 1% or more weaker versus the US dollar. European equities followed suit but declines (and the more measured declines earlier in the session) turned into a bit of a rout. Credit was better offered amid barely any flow in secondary, while primary only threw up a single plain vanilla deal which came in the senior financial sector.

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