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15th January 2020

🗞️ Shades of 2019

MARKET CLOSE:
iTraxx Main

43.6bp, unchanged

iTraxx X-Over

209.5bp, -0.4bp

🇩🇪 10 Yr Bund

-0.21%, -3bp

iBoxx Corp IG

B+105.5bp, +0.4bp

iBoxx Corp HY

B+340bp, +2bp

🇺🇸 10 Yr US T-Bond

1.80%, -2bp

🇬🇧 FTSE 100

7042.47, (+0.35%)
🇩🇪 DAX

12774.88, (-0.12%)
🇺🇸 S&P 500

3116.39, (+0.32%)

It’s almost laughable…

We’re into the second week of the new year and the barriers to a risk asset rally are being dismantled. US equities are in the ascendancy and, at this rate, the S&P500 index will be up at 3500 by quarter’s end. There are only around 200 points to go!

Even rate markets are playing ball with the day’s UK and US inflation/Eurozone industrial data showing enough (or not) to warrant a significant rates rally. Shades of 2019.

Admittedly, on the event risk side, we are in ‘relief-trade’ mode. The thawing in trade tensions between the US and China is the current driver of the rally – just as the phase one trade agreement was signed. Just a few days previous it was relief that the US and Iran had backed away from a more devastating confrontation. Macro is ticking over and all we need is a decent earnings season to see out a good quarter for markets. It would be some feat coming off the back of the 25%+ gains in stocks last year and 10%+ gains in higher beta credit sectors.

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