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Daily Archives: 12th February 2020

12th February 2020

🗞️ Another one bites the dust

iTraxx Main

41.7bp, -0.6bp

iTraxx X-Over

210.1bp, -0.4bp

🇩🇪 10 Yr Bund

-0.38%, +1bp

iBoxx Corp IG

B+101.4bp, -0.6bp

iBoxx Corp HY

B+331.5bp, -4.5bp

🇺🇸 10 Yr US T-Bond

1.63%, +4bp

🇬🇧 FTSE 100

6104.72, (+1.14%)
🇩🇪 DAX

12660.25, (+0.47%)
🇺🇸 S&P 500

3327.77, (+0.62%)

If you can’t beat ’em, join ’em…

Lord over them, admire them or just join them, because we ain’t going to beat them. The ability of the markets to swat aside any number of risk-events which might ordinarily have derailed them has been fantastic.

Indeed, it looks as though investors have taken the view that the spread of Covid-19 won’t be a Black Swan event. We’re going to need something spectacular now for that to be the case. The doomsayers have once again, seemingly got it wrong. Crisis averted.

Markets are trading on that assumption. Event-risk is sooo yesterday. We have record highs being set across many equity markets. Corporate bonds (in developed markets anyway) have held resolute throughout.

And we have a rate market generally on the defensive (relatively better bid), just in case – but also reflecting the non-trivial probability of policy action as Q1 economic weakness threatens to spill over in Q2.

However, it’s not quite a case of ‘crisis over’, but there is little point in pushing back against the current tide. 3,500 and 30,000 on the S&P and Dow indices are in sight, and any push to those levels is going to see corporate bond spreads (in Europe) back at, or close to, record tights as well.

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