Daily Archives: 8th July 2018

8th July 2018

Watch out, watch out, Trumpy’s about

iTraxx Main

69.4bp, -2.3bp

iTraxx X-Over

305.3bp, -6.9bp

🇩🇪 10 Yr Bund

0.29%, -1bp

iBoxx Corp IG

B+135.1bp, -1.1bp

iBoxx Corp HY

B+407bp, -3.2bp

🇺🇸 10 Yr US T-Bond

2.82%, -1bp

🇬🇧 FTSE 100

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🇩🇪 DAX

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🇺🇸 S&P 500

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Trying to make sense of the credit market…

There’s an argument that the corporate bond market has failed to deliver this year. The evidence is stark when we look at the usual drivers of expectations for the market. Investment grade spreads are 40% wider so far as measured by the iBoxx IG cash index (B+96bp to B+135bp), against most expectations that the first half would offer a more fruitful level of performance. Higher beta credit has not though fallen out of bed as it might have, given that IG performance, with spreads widening roughly in line if not less than the IG index.

Of course, credit markets are at risk of a significant level of further weakness if the economy takes a serious nosedive, and/or if there is a serious equity market correction of some sort. But it would be the lesser of all evils if any of those occurred.

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