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Daily Archives: 20th May 2019

20th May 2019

When the chips are down

MARKET CLOSE:
iTraxx Main

66.6bp, +1.7bp

iTraxx X-Over

284.1bp, +5.8bp

🇩🇪 10 Yr Bund

-0.08%, +2bp

iBoxx Corp IG

B+135.3bp, unchanged

iBoxx Corp HY

B+437.4bp, -1bp

🇺🇸 10 Yr US T-Bond

2.42%, +2bp

🇬🇧 FTSE 100

6144.25, (+1.26%)
🇩🇪 DAX

11657.69, (+1.33%)
🇺🇸 S&P 500

3036.13, (+0.74%)

Collateral damage a sign of things to come…

The collateral damage of the Trump order to blank Huawei on security grounds came through good and proper in the markets on Monday. What should have been – and initially looked like being – a small up or down session across the markets as they reacted to and absorb the weekend’s news flow (Aussie elections, Japanese GDP, Google/Huawei), turned into something much uglier.

Google limiting the use of its Android system on Huawei phones was the blow, but there will be bigger (negative) events to come elsewhere connected to the US security issue. Chinese state media has hit back and we’re looking at the likely escalation of the trade war.

The events around the Aussie elections, Japanese GDP and Google had kind of cancelled each other out for the early part, and we were awaiting the next headline in which to take a clear trading direction. However, the sell-off in stocks accelerated once investors took stock. Of course, it didn’t help following Trump’s tweet on ‘… the official end of Iran…’ if they threatened the US again. A miscalculation could spark a conflict with neither side looking like backing down.

Chipmakers were the ones in the crossfire, and led equity markets lower in what was otherwise a quieter session with a clear defensive tone employed through it, even if credit primary did manage to get several deals away.

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