EU Close

€IG is pointing to another step wider after yesterday's +2.2bp sell-off though still well clear (8bps) from a YTD move wider. Spread & yield investors traded places yesterday but that's been short-lived - bunds were flat today despite US rates rallying -4bps - its left IEAC unch & LQD up +0.5%. Swap spreads have held onto yesterdays widening - lower vol today leaving less room for swap hedgers to edge in excess returns (as they did yesterday).

€IG equivalents are -0.9%, local equities catching a US led risk-off sentiment into their close that's since reversed (S&P +0.7%). Not much change on the draggers- Financials (-1.9%) & Real Estate (-1.5%) - weak earnings (lower profit, higher credit losses, lower capital ratios) from BNP headlining the moves lower. In cash credit widening looks broad based - financials, Auto's (VW, Merc) & Bayer among the worst performers.

Risk sentiment in US afternoon has improved (CDX ~unch) & $IG prints are moving tighter though still firmly wider from its ~unch open.