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Daily Archives: 2nd October 2019

2nd October 2019

Not the brightest of starts

MARKET CLOSE:
iTraxx Main

57.4bp, +2.8bp

iTraxx X-Over

241.2bp, +8.2bp

🇩🇪 10 Yr Bund

-0.53%, +2bp

iBoxx Corp IG

B+123.5bp, unchanged

iBoxx Corp HY

B+411bp, +5bp

🇺🇸 10 Yr US T-Bond

1.60%, -5bp

🇬🇧 FTSE 100

6032.18, (+0.09%)
🇩🇪 DAX

12674.88, (+0.66%)
🇺🇸 S&P 500

3351.28, (+0.06%)

But credit markets weathering it…

It’s been an inglorious start to the new quarter. The health of the economy has grabbed the attention as we start the run-in to year-end. A string of weak data prints, especially around global manufacturing, has seen risk assets coming under some pressure, and global macro is struggling to find a bottom. In fact, it looks like the storm clouds are gathering some more.

Impeachment proceedings are developing apace in the US against Trump, the pro-democracy protests in Hong Kong have taken a turn for the worse, Brexit is reaching another critical moment and all are coming against that backdrop of a weakening global economy.

The central banks are doing their best in fighting against the growing weakness, but are behind the curve (in our view) and not helped by internal dissent, for example, on the appropriate policy response (ECB). There’s little reason for equities to rally (they’re not) and as the earnings season approaches, they likely will struggle to gain much from here.

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