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Monthly Archives: December 2020

13th December 2020

🇬🇧 Time to say Goodbye

MARKET CLOSE:
iTraxx Main

48.1bp, unch

iTraxx X-Over

250.2bp, unch

🇩🇪 10 Yr Bund

-0.64%, -4bp

iBoxx Corp IG

B+102.5bp, -1bp

iBoxx Corp HY

B+365bp, +7bp

🇺🇸 10 Yr US T-Bond

0.89%, -2bp

🇬🇧 FTSE 100

6,547, -53

🇩🇪 DAX

13,114, -181

🇺🇸 S&P 500

3,663, -5

And G’day, Cobber…

It’s clear that the EU isn’t going – nor has ever looked, to play ball. Neither willing nor able, the organisation’s latest stance and interim offer to the UK reeks of punishment – as suggested by PM Johnson. The penny must finally have dropped for the UK government, needing to become a rule-taker for a deal. And so Australia, that ol’ chestnut, it must be.

Not that the markets have necessarily yet reacted in so-called horror of a no-deal Brexit, judging by the relatively muted reaction (equities just 1% – 1.5% lower, sterling -0.6%) at the end of last week. Maybe investors hold out hope that a deal at the very last minute is still possible. Either way, it seems priced in.

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8th December 2020

🛣️ End of the Brexit road

MARKET CLOSE:
iTraxx Main

47.5bp, unchanged

iTraxx X-Over

240.5bp, -3bp

🇩🇪 10 Yr Bund

-0.61%, -3bp

iBoxx Corp IG

B+101.6bp, unchanged

iBoxx Corp HY

B+358bp, +2bp

🇺🇸 10 Yr US T-Bond

0.91%, -2bp

🇬🇧 FTSE 100

6,558, +3

🇩🇪 DAX

13,278, +8

🇺🇸 S&P 500

3,702, +10

It’s no deal unless someone rolls over…

We’re into the final few sessions in which to get any decent business done. And of course, a yes/no answer on a Brexit trade deal. On the business front, high yield borrowers are lining up, but IG ones will be fewer. Spreads should edge tighter for choice. Equities will broadly follow their path of least resistance, higher.

European rates are on hold until after Thursday’s ECB. The rest are wondering whether the 10-year Treasury benchmark will pop up past 1.00% and can Bitcoin zip through $20,000 per coin for the first time.

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6th December 2020

🗞️ Go with the flow

MARKET CLOSE:
iTraxx Main

45.3bp, -0.7bp

iTraxx X-Over

234.8bp, -8.6bp

🇩🇪 10 Yr Bund

-0.55%, -1bp

iBoxx Corp IG

B+101bp, -1bp

iBoxx Corp HY

B+356bp, -5bp

🇺🇸 10 Yr US T-Bond

0.97%, +7bp

🇬🇧 FTSE 100

6,550, +60

🇩🇪 DAX

13,299, +46

🇺🇸 S&P 500

3,699, +32

Teed up nicely for 2021…

In a super run of late, the S&P index is now less than one point away from 3,700. And the Dow index could – rather should – easily be above 30,000 when we reset the counter for 2021. More records for US equities will feed into an improved global equity narrative pushing record valuations in other markets as well.

Why not? Yellen’s back after all. Credit spreads will see record tights, we think. In IG, where the iBoxx index is currently at B+101bp (-3bp in 2020 so far), we are just 20bp of tightening away from a new record tight.

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2nd December 2020

🎄 Seasonal greetings, indeed!

MARKET CLOSE:
iTraxx Main

46.7bp, +0.5bp

iTraxx X-Over

250.7bp, -0.6bp

🇩🇪 10 Yr Bund

-0.52%, unchanged

iBoxx Corp IG

B+102bp, -0.5bp

iBoxx Corp HY

B+362bp, -4bp

🇺🇸 10 Yr US T-Bond

0.95%, +2bp

🇬🇧 FTSE 100

6,460, +75

🇩🇪 DAX

13,313, -69

🇺🇸 S&P 500

3,664, +2

The going’s about to improve…

We’re off to a flying start for December. The headline US equity S&P index is less than 1.5% from 3,700 and sits at around its record levels, poised for a tilt at that summit. All markets are being dragged higher because of it. Credit tighter. Commodities likely higher as macro recovery gathers pace. Even Bitcoin will be better bid at its own heady levels.

The Dow will look to break through 30,000 again. Most European markets are back in the black for the year (despite some weakness on Tuesday), just as the FTSE outperforms on Brexit hopes and the macro recovery benefits the international flavour of the earnings bias the companies in the index generate.

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