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27th May 2020

🏥 Markets defy gravity, again

MARKET CLOSE:
iTraxx Main

71.6bp, -1.6bp

iTraxx X-Over

431.3bp, -13bp

🇩🇪 10 Yr Bund

-0.42%, +1bp

iBoxx Corp IG

B+178bp, -8bp

iBoxx Corp HY

B+588bp, -26bp

🇺🇸 10 Yr US T-Bond

0.67%, -3bp

🇬🇧 FTSE 100

6285.94, (-1.33%)
🇩🇪 DAX

12733.45, (+1.64%)
🇺🇸 S&P 500

3179.72, (+1.33%)

Bullish mood persists…

The markets are determined to finish the month with a flourish, whilst attempting to recover much of the lost ground at the same time. There are bullish times as we seek to recover from the devastation wreaked by the Covid-19 global economic lockdown. If those vaccines, recovery medicines like Remdesivir and antigen tests are filled out en masse then we are looking at more risk asset pricing upside through June.

A good bid for equities as they look beyond the current data and into Q3/4 is likely. (Headline) event risk is the derailing factor – Hong Kong, for example. Rates might tread water in a narrow trading range grappling with masses of supply, any deflationary forces and central bank buying programmes. Credit spreads will go tighter and if the default outlook doesn’t come in as bad as currently projected – which is more than likely, then the high/low beta compression trade is back.

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