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5th March 2020

🗞️ Yo-yo market losing its way

MARKET CLOSE:
iTraxx Main

67.8bp, +3.8bp

iTraxx X-Over

317.3bp, +25.5bp

🇩🇪 10 Yr Bund

-0.69%, -6bp

iBoxx Corp IG

B+129bp, +2bp

iBoxx Corp HY

B+431bp, +14bp

🇺🇸 10 Yr US T-Bond

0.91%, -8bp

🇬🇧 FTSE 100

5510.33, (-5.25%)
🇩🇪 DAX

9632.52, (+1.90%)
🇺🇸 S&P 500

2541.47, (+1.89%)

Be careful out there…

US rate-cut suspicions aside, we had the classic market response to the US stimulus with investors subsequently looking for the ECB and BoE to follow suit. Equities did what they only can do – rise sharply as more and cheaper liquidity was anticipated, before succumbing to the headlines and renewed fear. There’s always tomorrow.

Markets are in short-term thinking mode and a cut from those other central banks might offer a reprieve – for a day or two. It’s clearly become a real traders environment amid the volatility, as nobody really knows where this is all going.

The Fed must have thought ‘job done’ for now as the rate cut got the perfect response earlier this week.  But with the markets expecting more, they will need to blink again and might do as early as the next FOMC. As for the EU, it needs to think outside the box, and allow for some leniency of the Maastricht fiscal rules.

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