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Daily Archives: 22nd September 2019

22nd September 2019

One step at a time

MARKET CLOSE:
iTraxx Main/S32

54.2bp

iTraxx X-Over/S32

215.6bp

🇩🇪 10 Yr Bund

-0.52%, -1bp

iBoxx Corp IG

B+122.5bp, unchanged

iBoxx Corp HY

B+394bp, unchanged

🇺🇸 10 Yr US T-Bond

1.72%, -3bp

🇬🇧 FTSE 100

5415.50, (-1.18%)
🇩🇪 DAX

9525.77, (-0.47%)
🇺🇸 S&P 500

2488.65, (-1.51%)

Q3 finishing line beckons…

We’re into the final week of the month and we should more than hang on to current performance. With stimulus in abundance and/or dovish policy broadly confirmed to be in place, there should be little reason to be fearful for Q3’s performance over the next few sessions. Fixed income’s year to date returns numbers are therefore going to look excellent, even if we have given a little back of late.

The credit primary market is throwing out deals aplenty and investors are lapping them up. Negative yields at re-offer are no deterrent. Prices are going higher – that’s good enough.

The recent sell-off in rates has pushed IG returns back to 6.5% year to date having put on only 1% in Q3 so far (that’s no hardship for this asset class) and Eurozone sovereign returns to back below 10%, to 9.2% (+3% in Q3 to date). Also no hardship. IG spreads, though, have lost a little of their lustre following a good rally initially, coming immediately after the ECB QE announcement – but we have had close-on the heaviest month of issuance since our records show going back to 2014. That explains much.

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