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MNI Credit Weekly: Back to the Ballot

AnalysisCredit AnalysisHomepageCreditStory

Executive Summary: Back to the Ballot

  • Just as one election completed, another appears to be coming. Credit rallied 5bp but only 1bp tighter to swaps. For all the talk of Trump trades in the equity market, credit impact was quite limited although reverse Yankees outperformed.
  • Vix collapsed post-US Election, falling to 14.9 from above 23 earlier in the week. US Small caps led the rally in equities, rising 7.7%, as tariffs were seen as benefiting domestic firms. Conversely, Euro Stoxx fell 0.9%.
  • Central Bank cuts by the Fed and BoE were overshadowed by the US election. The dollar market is now pricing in another 3.1 cuts out to September ’25 and the sterling market 2.6 cuts. The ECB next meets on 12th December; a faster pace of cuts is expected with 5.2 priced in out to September ’25. Bunds had a volatile week with the German government’s collapse adding to the sell-off, with the curve pivoting steeper around the 7yr point.
  • Primary markets were sidelined with just one corporate deal (Bureau Veritas) and three financials. Issuance should return next week with earnings season ending and the US election resolved. 

Full piece here:24.11.08 MNI Credit Weekly.pdf

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Executive Summary: Back to the Ballot

  • Just as one election completed, another appears to be coming. Credit rallied 5bp but only 1bp tighter to swaps. For all the talk of Trump trades in the equity market, credit impact was quite limited although reverse Yankees outperformed.
  • Vix collapsed post-US Election, falling to 14.9 from above 23 earlier in the week. US Small caps led the rally in equities, rising 7.7%, as tariffs were seen as benefiting domestic firms. Conversely, Euro Stoxx fell 0.9%.
  • Central Bank cuts by the Fed and BoE were overshadowed by the US election. The dollar market is now pricing in another 3.1 cuts out to September ’25 and the sterling market 2.6 cuts. The ECB next meets on 12th December; a faster pace of cuts is expected with 5.2 priced in out to September ’25. Bunds had a volatile week with the German government’s collapse adding to the sell-off, with the curve pivoting steeper around the 7yr point.
  • Primary markets were sidelined with just one corporate deal (Bureau Veritas) and three financials. Issuance should return next week with earnings season ending and the US election resolved. 

Full piece here:24.11.08 MNI Credit Weekly.pdf