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Fund Flows & Supply Expectations

CREDIT MACRO
  • Fund flows remained firm across high-grade - €IG in particular seeing strong inflows & points to mutual funds netting out the weakness we saw in IEAC/ETF outflows (-€600m over week). Little evidence of that giving enough support to meet above consensus €IG supply this week (€36b vs. c€21b) - we saw NIC's reappear and secondary struggling (without noticeable reversals in the sessions following). Similar dynamic in $IG where mutual funds are carrying inflows while primary metrics remained very strong for it on supply that again came in-line ($27.5b vs. c$30b).
  • $HY did report sizeable outflows (>$1b) - that matches HYG ETF outflows we saw through the week. As a positive HYG saw a bumper +$891m inflow yesterday that should give support for next weeks reporting (flows are reported to week ending Wednesday).
  • For recently troubled £IG, outflows flattened out and again little impact in secondary; spreads flat in-line with €IG - though arguably it has underperformed given curve movers this week were sewed to benefit it (Close brothers, Virgin Money tailwinds & avoiding Raiffeisen & Equinix sell-off's in €IG). £ supply remains muted.
  • $IG is expected to be quiet today, local primary markets has a sole £250m deal from NWGLN. Expectations (bbg surveyed) are for quieter week; around €16b in €/£ IG/HY and $20b in $IG - March supply is coming in at the top end (vs. historicals) for €/£ while $ comes in line with pre-covid avg's - differences haven't been a driver of secondary moves - MTD both looking at -8bp move.
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  • Fund flows remained firm across high-grade - €IG in particular seeing strong inflows & points to mutual funds netting out the weakness we saw in IEAC/ETF outflows (-€600m over week). Little evidence of that giving enough support to meet above consensus €IG supply this week (€36b vs. c€21b) - we saw NIC's reappear and secondary struggling (without noticeable reversals in the sessions following). Similar dynamic in $IG where mutual funds are carrying inflows while primary metrics remained very strong for it on supply that again came in-line ($27.5b vs. c$30b).
  • $HY did report sizeable outflows (>$1b) - that matches HYG ETF outflows we saw through the week. As a positive HYG saw a bumper +$891m inflow yesterday that should give support for next weeks reporting (flows are reported to week ending Wednesday).
  • For recently troubled £IG, outflows flattened out and again little impact in secondary; spreads flat in-line with €IG - though arguably it has underperformed given curve movers this week were sewed to benefit it (Close brothers, Virgin Money tailwinds & avoiding Raiffeisen & Equinix sell-off's in €IG). £ supply remains muted.
  • $IG is expected to be quiet today, local primary markets has a sole £250m deal from NWGLN. Expectations (bbg surveyed) are for quieter week; around €16b in €/£ IG/HY and $20b in $IG - March supply is coming in at the top end (vs. historicals) for €/£ while $ comes in line with pre-covid avg's - differences haven't been a driver of secondary moves - MTD both looking at -8bp move.