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Daily Archives: 30th March 2020

30th March 2020

🗞️ Corporate bonds: Help needed for the little guy

MARKET CLOSE:
iTraxx Main

98.1bp, +4.2bp

iTraxx X-Over

580.5bp, +4.3bp

🇩🇪 10 Yr Bund

-0.53%, -5bp

iBoxx Corp IG

B+255.4bp, +1bp

iBoxx Corp HY

B+806bp, +12bp

🇺🇸 10 Yr US T-Bond

0.66%, -9bp

🇬🇧 FTSE 100

6144.25, (+1.21%)
🇩🇪 DAX

11657.69, (+1.06%)
🇺🇸 S&P 500

3036.13, (+0.93%)

Good riddance to Q1, but will Q2 offer hope?

The first day of calm after 3 weeks. It doesn’t feel right. The S&P didn’t hit limit up/down and EM bonds were not moving in a 5/10 point range.

The enemy has been at the gates, though. Fund managers have been propped up against the door, stopping investors from breaking it down and getting their cash out from the various investment funds. That door is always too narrow when everybody wants to exit.

The ECB might have widened the door for the investment grade markets, but the orphaned markets are left to fend for themselves. For instance, the primary market is open, but well-known, large, hitherto solid, well-rated corporates are the only ones that can print – and for that, they are paying up.

Performance-wise, we are sitting on total returns (iBoxx) in IG credit of -6.1%, AT1 -18.3%, HY -15.9% and IG sterling of -6.0% for the year to date. Hard to imagine that it’s actually been worse. Last week’s huge rally in risk assets following the launch of those stimulus programmes – and now a rally in the underlying – has saved the day!

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