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Daily Archives: 15th May 2019

15th May 2019

Here we go again!

MARKET CLOSE:
iTraxx Main

66.4bp, +0.7bp

iTraxx X-Over

282.3bp, -1bp

🇩🇪 10 Yr Bund

-0.11%, -4bp

iBoxx Corp IG

B+136.6bp, +1bp

iBoxx Corp HY

B+444bp, +2bp

🇺🇸 10 Yr US T-Bond

2.38%, -4bp

🇬🇧 FTSE 100

6144.25, (+1.26%)
🇩🇪 DAX

11657.69, (+1.33%)
🇺🇸 S&P 500

3036.13, (+0.74%)

Afraid? Seems so – or maybe not…

Now THAT was completely unexpected! It was dire into the opening part of the US session, and then the markets rejoiced. The great man incredibly blinked as Trump delayed auto tariffs for up to 6 months. The markets will now think it might be a harbinger of things to come and he could cede to something similar with Chinese tariffs. Until then, rates were better bid even amid some German GDP numbers which suggested that the economy in Q1 had grown by 0.4% on the previous quarter, and although that was in line with expectations it shows an annual growth of just 0.7% versus 2% for the same period a year ago.

Nevertheless, those numbers were brushed aside as that level of growth gives little to cheer about given the state of global macro is a massive concern for Germany. Investors instead focused on the weaker Chinese industrial production (5.4%/previous 8.5%) and retail sales numbers (7.2%/previous 8.7%), both for April. The news that the US was evacuating diplomatic staff from Iraq ramped up tensions in the Gulf region and was much more of an immediate concern.

The 10-year Bund yield had slowly – and without too much brouhaha – crept back to -0.07% from 0.04% over the past two weeks, but declined to as low as -0.12% in the session (-5bp), thereby dropping 16bp this month. The record low closing yield on this benchmark is -0.19% (and -0.20% intraday).

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