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Daily Archives: 17th May 2020

17th May 2020

⚖️ Delicately poised

MARKET CLOSE:
iTraxx Main

90.2bp, +0.7bp

iTraxx X-Over

540bp, +4bp

🇩🇪 10 Yr Bund

-0.53%, unchanged

iBoxx Corp IG

B+207bp, +1bp

iBoxx Corp HY

B+676bp, +3bp

🇺🇸 10 Yr US T-Bond

0.65%, +3bp

🇬🇧 FTSE 100

6104.73, (+1.71%)
🇩🇪 DAX

13066.54, (+2.36%)
🇺🇸 S&P 500

3431.28, (+0.67%)

Credit market feeling some heat…

The Q1 data is out of the way. And as bad as that quarter was (ending with Eurozone GDP coming in at -3.8%), it was mostly all as expected. April’s numbers are worse (we had US industrial production and retail sales fall off a cliff on Friday), May’s data will barely be better but helped a little by the easing in the lockdowns, although we should stem much of the downward quarterly trend through June. But it will still be bad.

In the meantime, there is still much that can go wrong, even if the markets are looking at H2 with the glass half full. China’s economy is up and running. Each data point from there seems now to boost sentiment. Equities have settled in a new range significantly higher than their late March low levels. Rates seem to have found a floor, too, where benchmark yields have been in a narrow corridor for several weeks. Credit, though, is beginning to feel the pinch a bit.

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