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Corporate Credit Update, Subordinated Financials Underperforming

US

Investment-grade corporate credit risk topped new six week highs Thursday as stocks slipped to mid-July levels as well, partially in reaction to rising rate hike expectations. Currently SPX eminis trade -40.5 (-1.02%) at 3916; DJIA -135.03 (-0.43%) at 31376.12; Nasdaq -234 (-2%) at 11583.1.

  • Investment grade risk measured by Markit's CDXIG5 index +1.356 to 93.720 (94.649 session high last seen July 14); CDXHY5 high yield index at 98.532 (-0.215).
  • Outperforming credit sectors (tighter or least wide): Utilities and Consumer Discretionary pared at +2.7, followed by Materials and Industrials both at +3.1.
  • Lagging sectors (wider or least narrow): Subordinated Financials +5.1 followed by Communications +4.8 and Energy +4.0, Senior Financials +3.8.

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