Archive

Monthly Archives: October 2020

28th October 2020

🙏 It really might be all over

MARKET CLOSE:
iTraxx Main

64.7bp,+8bp

iTraxx X-Over

372bp, +31bp

🇩🇪 10 Yr Bund

-0.63%, -1bp

iBoxx Corp IG

B+125bp, +3bp

iBoxx Corp HY

B+480bp, +13bp

🇺🇸 10 Yr US T-Bond

0.76%, -2bp

Macro grinding to a halt…

The rampaging coronavirus is to blame but central banks have long used up any effective firepower to stem the misery that will come with this next spate of lockdowns. Personal tragedy abounds but it’s also difficult not to look at it as some kind of financial armageddon being the end result. Global macro is going to take a tumble but the Eurozone, in particular, is in it for it. The region’s central bank is firing blanks. Everything hinges on the development and roll-out of an effective vaccine.

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27th October 2020

💉 Vaccine’s longevity to shape the future

MARKET CLOSE:
iTraxx Main

58.8bp, +1.2bp

iTraxx X-Over

341.4bp, +2.3bp

🇩🇪 10 Yr Bund

-0.61%, -4bp

iBoxx Corp IG

B+121.9bp, +0.8bp

iBoxx Corp HY

B+466bp, +5bp

🇺🇸 10 Yr US T-Bond

0.78%, -2bp

🇬🇧 FTSE 100

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🇩🇪 DAX

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🇺🇸 S&P 500

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So fingers crossed, belt tightened…

Rocky ride? Oh yes. The impact of the coronavirus pandemic, the near-global rising caseloads and the second wave shuttering of economies has now taken in the first big-tech group. Germany’s SAP AG warned on profits on Monday – and got battered by an unforgiving market.

There will be more to come. But we will get through it. The other side will be some kind of nirvana in comparison given the awful year we have been through, although it will be no cakewalk as we get through it.

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25th October 2020

🗞️ Belt-in for a couple of rocky weeks

MARKET CLOSE:
iTraxx Main

55.0bp, -1bp

iTraxx X-Over

327.9bp, -5bp

🇩🇪 10 Yr Bund

-0.58%, unchanged

iBoxx Corp IG

B+120.8bp, -0.5bp

iBoxx Corp HY

B+458bp, -2bp

🇺🇸 10 Yr US T-Bond

0.84%, +2bp

🇬🇧 FTSE 100

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🇩🇪 DAX

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🇺🇸 S&P 500

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Heading into stormy waters…

The time has come for the US election which is now firmly in view. Some 50 million votes are said to have been cast already. Does that level of record turnout help Biden, or is latent Trump support turning up? It’s far from being a done deal regarding an easy Biden win.

The stimulus talks go on, but it’s fair to think in terms of ‘no agreement’ before the election. While we’re at it, there’s also no agreement on the Brexit-trade talks. No one is going to chase anything here (Bitcoin might be an exception), and we would think that the markets are going to tread water for the next couple of weeks.

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21st October 2020

⚖️ 2020’s performance hangs in the balance

MARKET CLOSE:
iTraxx Main

54.5bp, -0.3bp

iTraxx X-Over

326.9bp, -4bp

🇩🇪 10 Yr Bund

0.59%, +1bp

iBoxx Corp IG

B+122bp, -0.5bp

iBoxx Corp HY

B+462bp, -2.5bp

🇺🇸 10 Yr US T-Bond

0.82%, +2bp

🇬🇧 FTSE 100

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🇩🇪 DAX

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🇺🇸 S&P 500

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Getting to the crunch time…

It seems that the Covid second wave is going to wreak havoc across Europe – which will keep a lid on any meaningful market rally for the moment. That rally, though, could come – in the US especially – if we get that fiscal stimulus agreement. They’re into negotiation overtime but the word is that they’re close to agreeing something.

That would be a case of one down, three to go. The three? US election, a coronavirus vaccine and a Brexit trade agreement. It’s wishful thinking perhaps that we get all falling over the right side of the line (Barnier is already beginning to make the right noises, for example), but it also highlights how finely balanced everything is.

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20th October 2020

🗞️ As SURE as a bond issue can be

MARKET CLOSE:
iTraxx Main

54.8bp, +0.8bp

iTraxx X-Over

330.8bp, +2.7bp

🇩🇪 10 Yr Bund

-0.60%, +3bp

iBoxx Corp IG

B+122.5bp, -0.5bp

iBoxx Corp HY

B+464.5bp, -1bp

🇺🇸 10 Yr US T-Bond

0.78%, +2bp

🇬🇧 FTSE 100

[wp_live_scraper id=”17″], [wp_live_scraper id=”24″]
🇩🇪 DAX

[wp_live_scraper id=”19″], [wp_live_scraper id=”25″]
🇺🇸 S&P 500

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Cheap funding, it’s race to the bottom…

It is looking increasingly likely that the European economy is heading for a double-dip recession, putting an end to the nascent recovery observed since we emerged from the initial lockdown. The ECB’s Lagarde is voicing her concerns just as the BoE is too – as it starts the process of readying the UK financial system for negative rates. The US stimulus is coming – but not before the election, which itself has descended into chaos and farce.

We would think that the ECB will extend and/or add to the current range of QE programmes it has in place. And no doubt the UK will be cutting rates as well as adding more QE to provide assistance to an economy under pressure from the epidemic, and will especially be so if a no-deal Brexit becomes a reality.

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18th October 2020

🌍 Unless The World Collapses

MARKET CLOSE:
iTraxx Main

53.6bp, -2.8bp

iTraxx X-Over

326.9bp, -11.5bp

🇩🇪 10 Yr Bund

-0.63%, -1.5bp

iBoxx Corp IG

B+123.5bp, -0.3bp

iBoxx Corp HY

B+468bp, unchanged

🇺🇸 10 Yr US T-Bond

0.74%, unchanged

🇬🇧 FTSE 100

[wp_live_scraper id=”17″], [wp_live_scraper id=”24″]
🇩🇪 DAX

[wp_live_scraper id=”19″], [wp_live_scraper id=”25″]
🇺🇸 S&P 500

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Small wonder it’s tough to get excited…

According to Renault, they won’t be using a dime from the public purse. Unless the world collapses. Otherwise, we are getting used to market rallies followed by a dose of crash, bang, wallop. On those occasions, there is plenty of fear and loathing amid the excitement generated by those risk-on days.  It also means that market volatility is going to be with us for a bit.

No pre-election stimulus, no Brexit-trade agreement and increasing concerns on the coronavirus pandemic as the second wave takes hold. Equities are swinging wildly at times, rates are bid and credit somewhere in the middle – but an open primary window isn’t quite firing. And while it is increasingly looking like Trump is out – and it appears he will lose by some margin – the result has become a secondary issue.

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14th October 2020

🏦 Banks Keep it Rolling

MARKET CLOSE:
iTraxx Main

53.2bp, +1.3bp

iTraxx X-Over

326.5bp, +10bp

🇩🇪 10 Yr Bund

0.58%, -2bp

iBoxx Corp IG

B+121.7bp, unchanged

iBoxx Corp HY

B+458bp, +3bp

🇺🇸 10 Yr US T-Bond

0.72%, -1bp

🇬🇧 FTSE 100

[wp_live_scraper id=”17″], [wp_live_scraper id=”24″]
🇩🇪 DAX

[wp_live_scraper id=”19″], [wp_live_scraper id=”25″]
🇺🇸 S&P 500

[wp_live_scraper id=”21″], [wp_live_scraper id=”26″]

Earnings and stimulus vs pandemic…

Credit markets seem as though they are just treading water. The all-important primary market isn’t busting a gut any longer. Everything else follows. That is explained away by the blackout period as we enter the earnings season, but also the record-breaking deal volume already this year leaving less now to get done. Even if the demand for more paper is insatiable.

Secondary credit hasn’t done much for what seems like aeons, where spreads are currently squeezing tighter on the back of higher equities. Much can go wrong and few are prepared to make any big decisions ahead of the US election, nervous on the pandemic situation and not helped by the Brexit trade talks which are now likely going to head into extra time (again).

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13th October 2020

🇺🇸 Whether it’s Trump or Biden (or Harris)…

MARKET CLOSE:
iTraxx Main

51.9bp, +1.3bp

iTraxx X-Over

316.5bp, +9.5bp

🇩🇪 10 Yr Bund

-0.56%, -2bp

iBoxx Corp IG

B+121.3bp, -0.3bp

iBoxx Corp HY

B+455bp, unchanged

🇺🇸 10 Yr US T-Bond

0.73%, -4bp

🇬🇧 FTSE 100

[wp_live_scraper id=”17″], [wp_live_scraper id=”24″]
🇩🇪 DAX

[wp_live_scraper id=”19″], [wp_live_scraper id=”25″]
🇺🇸 S&P 500

[wp_live_scraper id=”21″], [wp_live_scraper id=”26″]

…the net effect on markets will be the same

Excitement or fear. They elicit a similar nervous, perhaps hesitant feeling throughout the markets. But another 2% and the S&P will see out a fresh record high. Admittedly, most of the political focus is on the US election where the polls have Biden so far in front that anything other than a win for him would represent the biggest failure in polling history – well, since the UK Brexit referendum anyway. For the markets, they have quite simply moved on, eyeing stimulus packages.

On that topic, the UK/EU trade talks are continuing this week – ahead of the EU summit on Thursday, which itself is needing to shed greater light on the region’s position. There’s only so much kicking down the road that this particular ‘can’ will take.

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11th October 2020

🗞️ Election, Brexit & Earnings all in the Mixer

MARKET CLOSE:
iTraxx Main

52.1bp, -2.2bp

iTraxx X-Over

317.7bp, -1.7bp

🇩🇪 10 Yr Bund

-0.54%, -2bp

iBoxx Corp IG

B+122bp, unchanged

iBoxx Corp HY

B+456bp, unchanged

🇺🇸 10 Yr US T-Bond

0.78%, +1bp

🇬🇧 FTSE 100

[wp_live_scraper id=”17″], [wp_live_scraper id=”24″]
🇩🇪 DAX

[wp_live_scraper id=”19″], [wp_live_scraper id=”25″]
🇺🇸 S&P 500

[wp_live_scraper id=”21″], [wp_live_scraper id=”26″]

US election in view, but we’re already over it…

It would now appear that the US election is unlikely going to inject much in the way of any serious levels of intraday/daily volatility into the markets. There has been too much crying wolf. Investors have now moved on to the post-election stimulus boosts – and which administration might have the greater impact.

The net effect of either in the near term – and through 2021, is that we’re possibly going to see a similar boost to US GDP growth before the different policies see a growth divergence (Democrat stimulus resulting in higher growth/higher national debt, too).

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7th October 2020

🗞️ Wising up to US political risk

MARKET CLOSE:
iTraxx Main

53.5bp, -0.6bp

iTraxx X-Over

318.1bp, -2.4bp

🇩🇪 10 Yr Bund

-0.49%, +2bp

iBoxx Corp IG

B+122.9bp, -0.8bp

iBoxx Corp HY

B+457.5bp, -2.5bp

🇺🇸 10 Yr US T-Bond

0.77%, +3bp

🇬🇧 FTSE 100

[wp_live_scraper id=”17″], [wp_live_scraper id=”24″]
🇩🇪 DAX

[wp_live_scraper id=”19″], [wp_live_scraper id=”25″]
🇺🇸 S&P 500

[wp_live_scraper id=”21″], [wp_live_scraper id=”26″]

If that were ever possible…

For once, markets didn’t fall out of bed, in Europe anyway. Trump has cried wolf so often that it might just be that investors have developed a thick skin, and are perhaps looking through his persistent berating. The US equity markets reacted poorly overnight but we didn’t follow in Europe. There was relative calm.

We would think that some sort of US fiscal stimulus is being priced in. That will come courtesy of either a smaller Trump injection, or the promise of a rocket-fuelled Biden one – should he be victorious in under a month’s time. Either way, once we get through the current noise, markets are going to rise.

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