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Corporate Credit Risk, Mildly Higher Ahead Next Earnings Cycle

US

Correlation to stocks not always positive -- corporate credit risk mildly higher/near midday highs even as equities trade firmer, near top end narrow session range.

  • S&P eminis currently trading +18.5 (0.41%) at 4514.75 vs. 4469.50 session low -- above key support of 4455.32 50-day EMA. Focus on latest earnings cycle that kicks off next week with financials make up the bulk of releases. JP Morgan and BlackRock are due to set the tone on Wednesday, before Citigroup, Goldman Sachs, Morgan Stanley and Wells Fargo follow.
  • Investment grade risk measured by Markit's CDXIG5 index currently +0.998 to 69.217 vs. 69.912 high; CDXHY5 high yield index mildly lower at 104.447 (-.368).
  • Outperforming credit sectors (tighter or least wide):Utilities sector (-0.5) with gas and electric service provider debt narrowing.
  • Lagging sectors (wider or least narrow): Communications sector (+1.1) underperforming for second day running followed by Technology and Sr Financials sectors (+0.2).

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