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21st May 2019

Luv’ it, just luv’ it!

MARKET CLOSE:
iTraxx Main

65.0bp, -1.6bp

iTraxx X-Over

278.1bp, -6bp

🇩🇪 10 Yr Bund

-0.06%, +3bp

iBoxx Corp IG

B+135.1bp, unchanged 

iBoxx Corp HY

B+434bp, -3bp

🇺🇸 10 Yr US T-Bond

2.43%, +1bp

🇬🇧 FTSE 100

6144.25, (+1.26%)
🇩🇪 DAX

11657.69, (+1.33%)
🇺🇸 S&P 500

3036.13, (+0.74%)

Credit in a class of its own…

Resilience comes to mind when offering a description of the corporate bond market at the moment. Equities might move higher or lower by up to 1.5% in a session as they react to the headline risks, but without a bigger down-leg, credit (at worst) just treads water or edges a little wider. The corporate bond market is holding firm at the moment as it trades into some kind of Goldilocks macro environment that helps this fixed income asset class which offers a better return than government bonds.

The excess pick-up is usually positive, even at the front-end (Bund yields negative out to 10-years) but it still isn’t great although we take it given the low-interest world that we occupy. Macro is unlikely going to change to see anything different (that is, higher rates) anytime soon. So we just keep clipping those (tiny) coupons.

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