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Corporate Credit Risk: Wider, Near Late Highs

Outsized reversal in corporate credit risk Monday, gapping wider near last Tuesday levels after equities reversed gains/traded weaker on hawkish Fed Powell comments.
  • Ending five consecutive sessions of improved corporate credit risk, investment grade risk measured by Markit's CDXIG5 index surged +7.6 to 71.832 after Fed Chair Powell comments on willingness to hike at least 25bp at every meeting to stem inflation.
  • Tsy futures extended session lows, 30YY hit 2.5274% high, yield curves bear flattened/inverted (3s and 5s vs. 10s), while SPX eminis extended session lows but was bouncing in late trade: -11.0 at 4442.5
  • Markit's CDXHY5 high yield index mildly lower in comparison at 105.348 (-.430).
  • Outperforming sectors (tighter or least wide) includes: Subordinated Financials (-3.6), Materials (-3.4) and Consumer Discretionary (-3.1) as resorts and airline debt risk improved.
  • Lagging sectors (wider or least narrow): Utilities and Industrials (both -1.3), Energy (-1.5).

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