Daily Archives: 25th July 2018

25th July 2018

Hot, hot, hot

iTraxx Main

63.0bp, -0.5bp

iTraxx X-Over

285.9bp, -1.7bp

🇩🇪 10 Yr Bund

0.39%, -1bp

iBoxx Corp IG

B+129.6bp, -0.7bp

iBoxx Corp HY

B+385.4bp, -1bp

🇺🇸 10 Yr US T-Bond

2.94%, -1bp

🇬🇧 FTSE 100

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🇩🇪 DAX

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🇺🇸 S&P 500

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Holding our own…

A potentially difficult summer lies ahead

The markets are not going to give up without a fight, and it is looking as if we are into the early throes of a difficult summer. Trump continues to do his level best to make sure we don’t rest up too much, this time urging the EU to scrap all tariffs ahead of talks with the EU’s Juncker. Eurozone growth is slowing as we know it to be, as evidenced by PMI data earlier this week and business survey data on Wednesday. However, a more sprightly report from the German industrial sector allied with that Chinese stimulus put in place to help prop up their domestic economy saw to it that markets will rally if the news flow warrants it.

We are not totally down and out and so far, and it’s been a good month for risk assets with July’s performance to date seeing most markets registering some decent gains. Equities lead the way with 2%+ gains for the month so far being typical, while IG credit spreads are 6bp tighter (iBoxx index) and total returns are a shade in the black for the month so far even after that recent sell-off in the underlying.

The high yield market has fared better with spreads 30bp tighter in the index and returns up at +1.5% for the month so far. After a fairly difficult May and June, that means total returns now come in at -0.5% year to date in high yield, representing a stellar turnaround when set against the near -2% of performance in the period to end June!

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