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Daily Archives: 23rd February 2020

23rd February 2020

🔻 Market being shaken out of its complacency

iTraxx Main

43.0bp, +0.8bp

iTraxx X-Over

219.6bp, +5.1bp

🇩🇪 10 Yr Bund

-0.44%, unchanged

iBoxx Corp IG

B+100.4bp, unchanged

iBoxx Corp HY

B+328bp, +2bp

🇺🇸 10 Yr US T-Bond

1.47%, -5bp

🇬🇧 FTSE 100

6095.41, (+1.33%)
🇩🇪 DAX

12799.97, (+1.32%)
🇺🇸 S&P 500

3185.04, (+1.01%)

Nervous breakdown…

The coronavirus is taking a greater grip outside of China now, and the economic impact is being felt are widely. More and more, it appears that macro won’t catch up with the loss of activity we are going to experience in Q1 and very likely in Q2.

The Chinese are now briefing that the economic impact (export/imports) will be severe in January and February. The IMF, over the weekend, shaved 0.1% off its 2020 global growth forecast to 3.2% and 0.4% off Chinese growth to 5.6%.

Markets ended last week on the defensive but continue to trade on hopes that the authorities can get it under control quickly and/or that central bank action is nigh which will save the day (sustain asset prices) for a little longer. It was a big preliminary PMI data release day on Friday. The picture was bleak.

In the US, manufacturing’s expansion slowed with the PMI for February up at 50.8, missing the 51.5 expectation but the big blow came in services where activity contracted (PMI at 49.4 versus estimates pitched up at 53!). The last contraction was in March 2016.

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