$IG Weakens into London Close

$IG index is printing wider into the afternoon potentially closing some of the outperformance we are seeing vs. €IG. $IG equity eqv's are -0.4%- nearly all the drag coming from Financials (-1.8%) & some from Real-estate (lower rates waved by on CRE concerns). KBW regional bank ETF down another -5%, down -10% since NYCB earnings, still trades well north of last yr's SVB crisis (Forward P/E at 10.8 vs. ~8 then).

Fed pricing has been the most dovish mover this week & its been passed along the curve to drive US rates outperformance. The impact of yield divergences on spreads seems debated among analyst. As we mentioned higher rates have been support for spreads this year (on yield buying) and lower rates are unlikely to be tied to better fundamentals which have largely been unch/not a large driver in IG. More opportunistic supply brought forward this month on lower rates could be another headwind for spreads. HY may find more support (particularly on inflation/wages driven rates rally) - refi & ICR concerns are more acute here.