Suki Mann

Author Archives: Suki Mann

16th June 2020

🍾 Whatever it takes

And the markets like it, a lot… Was that the sound of corks popping? The Fed is going to be buying corporate bonds. US retail sales bounced 18% higher in May (core by 12.4%) and well ahead of expectations. And there is talk of Trump possibly announcing a $1trn Federal infrastructure spending programme. Like discovering […]
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14th June 2020

🗞️ Wobble Over, Higher We Go

Economy in recovery mode… Every large equity market decline and the headlines have us back in the eye of the storm. Add into it the data for the months past coming in as feared – if not worse (UK GDP, for example), and it’s all over. However, there’s resilience being displayed by investors who appreciate […]
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11th June 2020

🥊 Down, but not out

Fed will underpin asset bubbles… Concern because of the Fed’s dovish outlook will eventually be overcome, as markets will be comforted by the easier monetary policy in place for what will seem like an eternity. The Fed will be mollycoddling the economy for another 30 months, as they grapple with weaker growth and a deteriorating […]
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10th June 2020

⏸️ Fed likely on hold for 18 months!

Markets flooded with deals… The pace of the IG non-financial issuance shows absolutely no sign of letting up. The market is being flooded with paper but the demand for it is undimmed, the mop-up operation working a treat. The deluge looks like we are heading for a €40bn+ June, after successive €50bn+ record-breaking months. The […]
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9th June 2020

HY Strategy: CMD Portfolio Performance Update 09/06/20

Market Overview

Global risk markets have been ripping higher. The huge liquidity injected into the financial system to help ease the pain of the economic downturn is looking for a home anticipating business as normal through H2. That’s before annual GDP growth shoots higher through the second leg of a V-shaped recovery in 2021.

The drivers are clear. All the data post-April is showing us that we are beginning to claw back lost growth, it’s going to be a long journey. Covid-19 transmission rates and associated deaths are declining. Lockdowns are easing. Economic recovery is picking-up albeit not quite bursting out of the starting blocks. That’s understandable.

Rates are lower for longer. The ECB/EU are adding more firepower to make sure there is no relapse and no deflation.

US equities (S&P) are now flat for the year to date and several good sessions away from their record level. European equities of late have joined the party, commodities haven’t done too badly and credit’s lure is undimmed.

We have a record run-rate in IG non-financial primary issuance, the bank AT1 market has re-opened with some massive investor interest and we can see the first signs of light emerging in high yield primary. S&P’s latest default comment has seen the agency give itself a wide berth as to what the default rate in Europe might peak at – a low of 3.5% and a high of 11.3%, but likely around the 8.5% mark.

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8th June 2020

🐗 Yield hogs pile in

Rally sparks AT1 primary into life… The credit markets’ rally over the past few weeks sparked the corporate hybrid sector back into life. Yield was the story in the session. We had two AT1 issues after an absence of several months and a non-financial hybrid thrown into the pot for good measure. Why not? After […]
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7th June 2020

📈 Why it’s Boom Time for Risk Assets

Markets on turbo boost… Can it hold? It most certainly can. That was a freaky Friday and the excitement across the investor universe was palpable. Trump was crowing. There is much suspicion, plenty of head-scratching and there certainly will be inquests as to why the economists have been so badly wrong-footed by that non-farm payroll […]
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4th June 2020

⤴ It’s a swoosh, a W, an L… No: Markets pricing in a V

Macro mood music upbeat… After hitting the slightest of bumps, the demand for corporate debt has increased again. Markedly, at that. We had observed that new deal subscriptions and final pricing (versus the initial guidance) had withered during the last couple or so weeks of May, from more effusive levels. However, primary market activity over […]
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2nd June 2020

🗞️ Spreads continue on path of least resistance: Tighter

Summer of (dis)content… It was a pandemic-driven, panic-stricken and exacerbated by secondary market illiquidity decompression between high and low beta corporate credit spreads at the end of March. After gapping to give over 600bp worth of spread difference between the HY and IG iBoxx cash indices, a couple of months on and we are now […]
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31st May 2020

🗞️ Event risk vs market liquidity

ECB and US payrolls to dominate… We might have closed May on a sour note on the back of increased tensions between the US and China, Trump and social media and (albeit expected) weak macro data for Q1/April and May BUT all was/is not lost. On China, the US will be decisive (whether we agree […]
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