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10th May 2020

🗞️ Looking beyond the first half

MARKET CLOSE:
iTraxx Main

86bp, unchanged

iTraxx X-Over

515bp, unchanged

🇩🇪 10 Yr Bund

-0.53%, -1bp

iBoxx Corp IG

B+196.7bp, -0.5bp

iBoxx Corp HY

B+662bp, unchanged

🇺🇸 10 Yr US T-Bond

0.68%, +5bp

🇬🇧 FTSE 100

6104.73, (+1.71%)
🇩🇪 DAX

13066.54, (+2.36%)
🇺🇸 S&P 500

3431.28, (+0.67%)

Data and markets diverge…

There was no shock but certainly a bit of awe. And plenty of headlines about the post-war high 14.7% US unemployment rate and the record loss of over 20 million non-farm jobs in April. Markets, though, are looking beyond it – because that was all well-telegraphed. The numbers in Europe through last week, for April, were just as unedifying. May’s data will be poor too but with lockdowns easing, we have some recovery in activity and there is a path to some sort of recovery being established.

The dynamic of that recovery, though, remains uncertain. Nevertheless, equities are already trading the second half of 2020. In credit, things move slower. That’s the nature of the fixed income markets. Highly indebted corporates are busy trying to remain solvent. Their ability to service their obligation is paramount. Otherwise, default beckons.

The primary markets though are open for IG corporates and they are printing at a record pace, in order to defend and bolster balance sheet integrity.

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