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Daily Archives: 14th July 2019

14th July 2019

Here comes the summer sun…

MARKET CLOSE:
iTraxx Main

49.3bp, -0.1bp

iTraxx X-Over

245.9bp, -0.1bp

🇩🇪 10 Yr Bund

-0.25%, -1bp

iBoxx Corp IG

B+116.5bp, -0.5bp

iBoxx Corp HY

B+402.8bp, -0.5bp

🇺🇸 10 Yr US T-Bond

2.12%, unchanged

🇬🇧 FTSE 100

7480.69, (+0.93%)
🇩🇪 DAX

13323.69, (+0.90%)
🇺🇸 S&P 500

3276.24, (+0.98%)

Markets play it cool…

Equities in the US into record territory, rates giving up some of their stellar gains and IG credit spreads at levels not seen since May 2018. A dovish Fed has laid the foundations for a rate cut at the end of month FOMC meeting, and the ECB looks as if they will also cut the deposit rate and/or announce a new QE programme. Equities will get a further boost, rates will recover their recent losses and yields will plunge lower while credit spreads will tighten some more as we set the stage for a post-summer rally.

We’ve had far less primary than might have been expected last week and it would appear that the markets have pretty much wound down for the holiday period. We barely added anything in IG, the HY market is yet to see a deal this month – while financials have been busy with some well-received and testy AT1 offerings appealing to the yield hogs.

IG credit spreads have ground out some further performance and the IG iBoxx cash index has tightened to B+116.5bp. That represents 9bp of tightening this month, while returns are only marginally off their year to date highs and up 0.25% in July.

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