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2nd February 2020

❔ The Big Question

MARKET CLOSE:
iTraxx Main

46.4bp, +0.5bp

iTraxx X-Over

231.2bp, +3bp

🇩🇪 10 Yr Bund

-0.44%, -3bp

iBoxx Corp IG

B+105bp, unchanged

iBoxx Corp HY

B+367bp, +3bp

🇺🇸 10 Yr US T-Bond

1.51%, -5bp

🇬🇧 FTSE 100

7042.47, (+0.35%)
🇩🇪 DAX

12774.88, (-0.12%)
🇺🇸 S&P 500

3116.39, (+0.32%)

Twin-pronged attack…

The coronavirus rages and is finally having the impact on the markets that the headlines warrant. It could already have been a lot worse.

In part, that has to be due to the US earnings season which has been mixed, but has seen the likes of Amazon hammer expectations and offer a small brake effect to try and limit the downside. Unfortunately, from here, the virus’ impact is likely going to get worse.

The narrative for February will be dominated by the spread of the infectious disease and how that will the impact global economy. It doesn’t look great at the moment, as more and more cases and deaths are reported. Some markets managed to hang on, by their fingertips, to gains in the opening month – but that dynamic is unlikely going to persist through February.

That’s because there is going to be a significant hit on global growth.  For example, Eurozone growth – already weakening from the trade war as seen in the Q4 data – is going to come under further pressure throughout the first half at least. Recession looms large.Continue reading