Corporate Credit Risk:

Corporate credit risk climbed higher Tuesday, nearly reversing Mon's move to lowest levels for investment grade debt risk since mid-March as stocks reversed course/trade gradually lower after hawkish Fed rhetoric weighed heavily on rates markets.

• In short, Fed Gov Brainard and KC Fed George delivered one-two punch to markets midmorning on the importance of keeping inflation contained by raising rates methodically and starting draw balance sheet draw down as soon as May. Neither directives new but 30YY surged from around 2.50% prior to 2.58% high.
• Investment grade risk measured by Markit's CDXIG5 index currently +1.672 to 65.505; CDXHY5 high yield index mildly lower at 105.575 (-.425).
• Outperforming credit sectors (tighter or least wide): Materials sector (-3.2) as debt issued by multiple gold and rare earth miners outperform for second day running (Rio Tinto, Barrick, Vale, BHP Billiton, AngloGold Ashanti to name a few) followed by Financials (subordinated) (-2.6) with some big name debt outperforming (AON, Fifth Thirs, AIG, Westpac, MetLife and Sumitomo).
• Lagging sectors (wider or least narrow): Energy (-0.7) with Energy Transfer LP / Regency Energy and Conoco underperforming