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Corporate Credit Update: Sharp Compression, IG at April Lows

US

Investment-grade corporate credit risk fell sharply Wednesday after flat CPI inflation for July helped yield curves climb off steeper inversion, stocks surged higher, SPX breaching May 31 resistance. Currently, SPX eminis trade SPX eminis trade +77 (1.87%) at 4202; DJIA +505.79 (1.54%) at 33282.31; Nasdaq +312 (2.5%) at 12807.97.

  • Investment grade risk measured by Markit's CDXIG5 index -5.229 to 77.287 (mid-April lows); CDXHY5 high yield index at 102.203 (+1.224).
  • Outperforming credit sectors (tighter or least wide): Communications (-2.9), Senior Financials and Consumer Staples (-2.5) while subordinated Financials, Technology and Industrials declined -2.4.
  • Lagging sectors (wider or least narrow): Utilities (-1.4), Materials (-1.9) and Energy (-2.1).

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