Daily Archives: 31st July 2018

31st July 2018

Not bad

iTraxx Main

60.9bp, -1.8bp

iTraxx X-Over

282.9bp, -4.3bp

🇩🇪 10 Yr Bund

0.45%, unchanged

iBoxx Corp IG

B+125.5bp, -0.5bp

iBoxx Corp HY

B+377bp, -1bp

🇺🇸 10 Yr US T-Bond

2.96%, -2bp

🇬🇧 FTSE 100

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🇩🇪 DAX

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🇺🇸 S&P 500

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Needing to keep those fingers crossed…

The markets must have had a decent July, judging by the warnings we’re seeing now about not getting complacent as risk assets ride high (relatively). We’ve had a few decent sessions of late. Of course, geopolitical tensions remain elevated but risk markets have done very well this month, managing to correct higher in most markets.

Equities have bounced and credit spreads have moved tighter, ensuring total returns for the year-to-date have got back to more sensible levels following a fairly difficult opening first half. The risks to the downside remain elevated and we could yet live through a material correction, but right now markets are choosing to trade positively – especially as the war cry around the trade tariff situation has been more muted of late.

It helps that the Chinese have seemingly taken a more reflective and considered approach against Trump’s more gung-ho, erratic and at times rumbustious Twitter outbursts. We just might re-open for business proper in late August with the market in good shape. That means credit markets should be ready for a quarter of higher levels of issuance which will be taken down well as spreads continue to grind tighter into it and rescue performance, while reducing those high levels of portfolio cash positions.

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