Daily Archives: 23rd March 2020

23rd March 2020

🗞️ Pyrites at the end of the primary rainbow

iTraxx Main

118bp, unchanged

iTraxx X-Over

705bp, +20bp

🇩🇪 10 Yr Bund

-0.38%, -4bp

iBoxx Corp IG

B+259bp, +10bp

iBoxx Corp HY

B+913bp, +25bp

🇺🇸 10 Yr US T-Bond

0.77%, -17bp

🇬🇧 FTSE 100

6049.62, (-1.73%)
🇩🇪 DAX

12489.46, (-0.04%)
🇺🇸 S&P 500

3152.05, (-0.65%)

Closing for business…

Another day goes by and it was another decent leg lower in for risk assets. Even with the Federal Reserve going all-in, becoming the ultimate back-stop bid for fixed income markets, failed to prop up risk markets. Classically, it ought to have translated into some material support across those very markets. It didn’t, coronavirus doesn’t listen, and we d0 not foresee see any significant improvement in confidence in risk assets anytime soon. Next up, though: the cavalry.

But the virus will hold out against it. The Republicans and Democrats can’t quite agree a Covid-19 economic package just yet. Until they do, we are unlikely going to establish any sort of floor for the markets. It’s amazing that we do continue to go lower, because the Germans also signed off on a €750bn package designed to help support stricken domestic companies, as well as including a chunk for additional social aid.

Credit markets are not spared – far from it. They continue to drift or ratchet wider (spreads) stunned by illiquidity in the secondary market and a huge fear of the unknown for this market once macro at least stabilises. That’s some way off, meaning that there is a lot of pain yet to come.

Primary issuance, if a window opens, is likened to being lured by a pot of fool’s gold. Plenty have (previously) got sucked in.

Continue reading