Daily Archives: 12th June 2018

12th June 2018

Change should be coming

iTraxx Main

72.1bp, +0.9bp

iTraxx X-Over

306.3bp, +5.2bp

🇩🇪 10 Yr Bund

0.49%, unchanged

iBoxx Corp IG

B+127.4bp, -1bp

iBoxx Corp HY

B+376.1bp, -3.5bp

🇺🇸 10 Yr US T-Bond

2.96%, unchanged

🇬🇧 FTSE 100

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🇩🇪 DAX

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🇺🇸 S&P 500

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Time to step out of the comfort zone…

Trump hit it out of the park, or he should have, but we were too light on detail. There’s a long way to go, the North Korean regimes past have got form in reneging on deals. But this could be the start of something new and we should give it all the benefit of any doubt. As such, there was a strangely subdued reaction in the market to the news. Probably because we didn’t get too much detail but we had much other news flow to think about.

We also had the debate and voting on the EU Withdrawal Bill in the UK, with the government having to contend with a ministerial resignation in the process. The liberalists in the establishment are putting up a stern fight on both sides of the Atlantic.

It was worth reflecting also on the decline in vehicle sales for BMW with 10% or more drops in Germany and China in May. And the important ZEW economic sentiment survey in Germany for May fell deeper into the red, to -16.1. It was last at this level back in 2012 at the height of the Eurozone crisis. There’s no crisis (yet) of the same magnitude we had back then. But it seems we’re getting a sustained slowdown in activity with the threat of Italy becoming the latest and most difficult to handle bad boy of EU harmony amid worries that the trade war will spiral out of control.

Confidence appears shot. We’re treading water. Waiting. One of the biggest geopolitical concerns often cited as a risk to global macro/confidence/investment is, for now at least, off the ‘danger monitor’ and the headlines will be more positive around it through the summer months. The aforementioned factors will come to the front of the queue and have a stranglehold on how markets develop and play out through the summer months.

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