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Corporate Credit Update: Heating Up

US

Not a big surprise, investment-grade corporate credit risk turned higher as stocks
reacted negatively to carry-over increase in chances of 100bp rate hike from FOMC after Wed's hot CPI. Levels dipped briefly on Fed Gov Waller comments that CPI only anchored his 75bp hike view -- are gaining again as stocks come under renewed pressure: SPX eminis currently trading -46.25 (-1.22%) at 3758; DJIA -413.18 (-1.34%) at 30358.22; Nasdaq -97.7 (-0.9%) at 11149.75.

  • Investment grade risk measured by Markit's CDXIG5 index +2.449 to 96.452; CDXHY5 high yield index at 97.388 (-0.707).
  • Outperforming credit sectors (tighter or least wide): Utilities and health Care both +1.7, followed by Industrials and Energy +2.2.
  • Lagging sectors (wider or least narrow): Materials, Sr Financials and Financials subordinated all +2.8, followed by Consumer Discretionary and Communications, both +2.6

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