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Corporate Credit Risk: Higher But Time to Improve

US
Corporate credit risk is holding near late session highs after a tighter open as thin markets remain sensitive to geopol headline risks.
  • Apparently ignoring Russia/Ukraine headlines earlier, credit risk climbed higher as stocks gapped lower -- possibly related to reports of fires at Aramco oilfield after missile strikes with crude prices bouncing $3 off lows.
  • Credit risk may yet reverse course as equities have started to bounce again in late trade: (SPX emini +12.5 at 4525.0). Investment grade risk measured by Markit's CDXIG5 index currently +1.118 to 72.01; CDXHY5 high yield index mildly lower at 105.365 (-.218).
  • Outperforming credit sectors (tighter or least wide): Materials sector debt outperforming (-2.794) lead by a broad swath of ore/gold mining companies. Next up: Financials subordinated (-1.7) with multiple domestic and Japanese banks improving.
  • Lagging sectors (wider or least narrow): Energy sector and Industrials (-.7-.8) oil refiners improved on the day but at the low end of the list. On industrials, bearing and transmission maker Timken debt underperformed.

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