Category Archives for "Fixed Income Market"

24th November 2020

🎈 Markets lift off again

It’s the moon next… Judging by the level of market activity, a fear of missing out has returned and must be the dynamic driving the rally. The US Thanksgiving break has just about arrived and it has seen investors pile in ahead of it. We’re not going to see much after Wednesday’s session, with normal […]
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22nd November 2020

🗞️ Corporate bond market in a sweet spot

IG spreads heading for record tights in 2021… We’re into Thanksgiving week, but it’s not quite a case of ‘that’s all folks’. There ought to be a flurry of activity into the long break, but next week still offers investors a chance to get involved or not. That depends on the Black Friday/Cyber Monday sales […]
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19th November 2020

🗞️ Corporate bond markets’ clear direction

Brakes applied, except in primary… It seems like markets have hit the proverbial brick wall. After a massive relief rally on the back of coronavirus vaccine developments, any fresh news on them isn’t eliciting the same euphoric response (if any at all). Buy the rumour, sell the fact of course. Now it’s the hard macro […]
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18th November 2020

Corporate bonds? Naaah, ₿itcoin

Bitcoin’s rise has been relentless… We really should be talking about Bitcoin, because that’s where the action is. We are at, or around, record highs in the US equity markets as the S&P and Dow look to imminently test 3,700 and 30,000, respectively. Such excitement. But The leading cryptocurrency’s exponential gains since early September have […]
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16th November 2020

💪 Markets get another shot in the arm

The only way is up… It used to be that case that easier policy elicited euphoria in risk markets. Now it’s drugs. We were already feeding off the positive close last week in the US and weekend news that Trump might be softening his stance about his leaving office. But then the big drugs news […]
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15th November 2020

🗞️ Still plenty of market upside

Despite the virus second waves… Judging by the market movements over the past few ‘post-rally’ sessions, some concern has taken over investors’ thinking on second wave pandemic coronavirus cases surging through Europe and the US. The soul searching has left rates almost suddenly better bid. Equities have edged off the recently achieved record highs but could […]
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11th November 2020

🗞️ Readying for the next big leg higher

MARKET CLOSE:
iTraxx Main

50.4bp, unchanged

iTraxx X-Over

293bp, +3bp

🇩🇪 10 Yr Bund

-0.51%, -2bp

iBoxx Corp IG

B+108bp, -1bp

iBoxx Corp HY

B+409bp, -1bp

🇺🇸 10 Yr US T-Bond

0.96%, unchanged

🇬🇧 FTSE 100

6,382, +86

🇩🇪 DAX

13,216, +53

🇺🇸 S&P 500

3,575, +30

Near term ‘V’ anticipated…

After the euphoria, now there is calm – and the need to take a sober look at the situation. It’s going to be bright for markets, we believe. The economic normalisation process – albeit if only back to pre-pandemic levels of activity will elicit a bullish investor response and risk asset valuations will rise, potentially quite significantly.

Obviously, Trump is still hopeful. But Biden will surely be inaugurated. We have news of a vaccine and that will be the predominant driver for the rest of this quarter’s performance. There’s been a little circumspection about the vaccine from some quarters, but the Pfizer/BioNGen effort will be added to by others. We should therefore be nearing the endgame of the constant lockdowns and find a floor and that is what the markets are cock-a-hoop about.

Growth will turbocharge off it but that doesn’t mean we have suddenly found the answer to all the macro ills that were blighting the landscape before the virus took hold.

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9th November 2020

🎉 A Vaccine in Sight = Market Euphoria

MARKET CLOSE:
iTraxx Main

50.3bp, -2.2bp

iTraxx X-Over

293.2bp, -20.3bp

🇩🇪 10 Yr Bund

-0.54%, +8bp

iBoxx Corp IG

B+111bp, -8bp

iBoxx Corp HY

B+415bp, -30bp

🇺🇸 10 Yr US T-Bond

0.96%, +14bp

🇬🇧 FTSE 100

6,185, +275

🇩🇪 DAX

13,101, +621

🇺🇸 S&P 500

3,601, +93

All falling into place for Biden…

Now that’s what we call a rally! Already riding high on the back of the Biden election win at the open, the news later that the Pfizer/BioNTech vaccine was found to be 90% effective saw markets in euphoric form.

The S&P hit a new record high and our 3,700 target at year-end now looks an ultra-conservative one! Rates markets alone were in reverse as credit spreads saw an almighty squeeze. None of that was quite in the script. Still, it’s relief all round. An early present for Biden. Happy Thanksgiving and Merry Christmas and all that.

The dynamics will have altered in the near term as investors get excited about the potential for higher growth, activity and the reflation trade. Specifically, a return to some kind of normality means markets are ending the year on the front foot everywhere and a broad macro recovery means that the widget makers will possibly roar ahead and outperform. Big tech and healthcare are likely going to take a bit of a back seat.

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8th November 2020

🗞️ Whoever said markets hated uncertainty!

MARKET CLOSE:
iTraxx Main

52.5bp, -1.1bp

iTraxx X-Over

313.5bp, -6.8bp

🇩🇪 10 Yr Bund

-0.61%, +2bp

iBoxx Corp IG

B+119.3bp, -2bp

iBoxx Corp HY

B+445bp, -5bp

🇺🇸 10 Yr US T-Bond

0.82%, +4bp

🇬🇧 FTSE 100

5,910, +3.8

🇩🇪 DAX

12,480, -88

🇺🇸 S&P 500

3,509, -1

Hamstrung administration boosts markets…

A day or two either side of the US election, the political uncertainty had resulted in a huge risk asset rally. Few would have thought it, but a potentially contested election result and the lack of a clean sweep for the Democrats had offered investors a bullish narrative.

There was obviously bit of a relief trade in there as well. Markets are now faced with some sort of an administration (lame-duck) likely limited in what it can achieve but, with it, a whole host of (policy) transformational risks have suddenly disappeared. When needs must, investors can twist the narrative for the cause.

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5th November 2020

🗞️ It ain’t done and dusted just yet

MARKET CLOSE:
iTraxx Main

58bp, -3bp

iTraxx X-Over

339.7bp, -9.4bp

🇩🇪 10 Yr Bund

-0.64%, -2bp

iBoxx Corp IG

B+125bp, -1bp

iBoxx Corp HY

B+469bp, -5bp

🇺🇸 10 Yr US T-Bond

0.78%, -10bp

🇬🇧 FTSE 100

5,883, +96

🇩🇪 DAX

12,324, +235

🇺🇸 S&P 500

3,443, +74

Path to victory still there, for both…

According to the polls and the popular press (read: establishment), this what we should have written. “A substantial two-day pre-election rally, and the market was pricing perfection. For once, it was right. A Biden victory looked nailed on, but the Democrats sweeping into control of both houses (Congress and Senate) is what will drive them on some more. That stimulus package is coming. The markets will love it.”

Instead, we are left incredulous at what has been a gargantuan and resilient effort, David-like from Trump against the Goliath of the establishment/’social’ media which is potentially on the brink of being defeated. All very Brexit-like.

As at the time of writing, President Trump is still in the game. And the blue-wave trade might be on the brink of unravelling – not that we would have thought judging by the euphoric Election Day rally.

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