Daily Archives: 18th March 2020

18th March 2020

🙈 Spread Charts Have to be Seen to be Believed

iTraxx Main

135bp, +18bp

iTraxx X-Over

700bp, +100bp

🇩🇪 10 Yr Bund

-0.23%, +20bp

iBoxx Corp IG

B+245bp, +25bp

iBoxx Corp HY

B+860bp, +65bp

🇺🇸 10 Yr US T-Bond

1.25%, +25bp

🇬🇧 FTSE 100

6049.62, (-1.73%)
🇩🇪 DAX

12489.46, (-0.04%)
🇺🇸 S&P 500

3152.05, (-0.65%)

Helicopter money on stand by…

We’re beginning to see the first vestiges of the coronavirus storm’s impact on macro with data emerging ex-China, and the readings are going to look as bad (if not worse) as we might have feared – with big demand/supply-side shocks. The current numbers have merely set a marker for what’s to come.

To their credit, authorities have reacted – on an unprecedented scale. And that initial market reaction (on Tuesday) might have left many to think that, having essentially kitchen-sinked it, we would have been close to establishing a floor. That exuberance was completely offside. The almighty sustainable bounce looks like it is some time away.

Unfortunately, we’re now getting the first reports of second wave effects emerging in Asia, suggesting possibly flawed strategies around suppressing the virus. It might be that until we develop a vaccine or develop a herd immunity (going along with the science), then we potentially remain at risk. So market volatility is with us for a while, and we are likely to discover a few more floors yet.

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