Corporate Credit Sours, Financials Lead Widening

Despite the better than expected Feb employ data this morning Investment grade credit spds forging wider -- at/near session highs as stocks continue to sag amid ongoing jitters over Russia's war in Ukraine -- markets on edge ahead weekend after Russia shelled Europe's largest nuclear reactor based in Ukraine last night.

• Credit spds had already begun bouncing off lows in late NY trade Thu despite the positive tone over third round peace talks and cease fire "corridors" that lent to decent pick-up in risk appetite yesterday.
  
• Uncertainty over coming weekend buoying vol (VIX +3.83 at 34.31) while crude surges to new highs (WTI tapped 113.8), an inflation metric being watched by the Fed while the Fed enters blackout period at midnight.
  
• While rates trade higher, short end remains under heavy pressure as traders look for extension of FRA/OIS widening in March-June. Short end swap spds leading move wider early Fri, possible link to increased funding concerns tied to Russia risk exposure for global banks.
  
  • IG corporate credit risk measured by Markit's CDX IG5 index near first-half high of 75.59 at the moment.
    
  • Financials sector leads wider credit spds amid ongoing concerns over Russia risk exposure for GSIBs, with Materials and Communications sectors close.
    
  • Markit's CDXHY5 high yield index, usually rises as credit risk improves is currently near lows of 104.35 at 104.43 (-.68).