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MNI Credit Weekly: Calm Before the Earnings Storm

AnalysisCredit AnalysisCreditStory

Executive Summary: Calm Before the Earnings Storm

  • A general tightening with Index OAS dropping 2bps from 111 to 109. Main/XO tightened -1/-4bps. This move seemed to be driven more by technical demand rather than macro factors.
  • The Chinese market reopened this week and was initially disappointed with the lack of news on further stimulus measures. The HangSeng dropped 6% on the week which was a recovery compared to the -10% drop on Tuesday morning. More stimuli may be announced over the weekend as Zheng Shanjie’s piece in the People’s Daily alluded to macro-economic monitoring and expanding domestic demand.
  • Rates markets sold off this week as CPI came in above expectations, although the components that matter for PCE were not that strong. The UST 10yr was +12bps. Bund 10yr was +7bps.
  • Institutional Fund Flows remain positive, but slowing, for credit. ETFs saw meaningful outflows in the US.
  • Primary was again quiet as many names are in blackout. The earnings’ season began in earnest today with JPMorgan and Wells Fargo. Next week will have results from 35 issuers including Bank of America, Citi, Morgan Stanley in banks and JNJ, Sartorius, P&G and Abbott Labs in healthcare/consumer. 

Full piece here: 24.10.11 MNI Credit Weekly.pdf

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Executive Summary: Calm Before the Earnings Storm

  • A general tightening with Index OAS dropping 2bps from 111 to 109. Main/XO tightened -1/-4bps. This move seemed to be driven more by technical demand rather than macro factors.
  • The Chinese market reopened this week and was initially disappointed with the lack of news on further stimulus measures. The HangSeng dropped 6% on the week which was a recovery compared to the -10% drop on Tuesday morning. More stimuli may be announced over the weekend as Zheng Shanjie’s piece in the People’s Daily alluded to macro-economic monitoring and expanding domestic demand.
  • Rates markets sold off this week as CPI came in above expectations, although the components that matter for PCE were not that strong. The UST 10yr was +12bps. Bund 10yr was +7bps.
  • Institutional Fund Flows remain positive, but slowing, for credit. ETFs saw meaningful outflows in the US.
  • Primary was again quiet as many names are in blackout. The earnings’ season began in earnest today with JPMorgan and Wells Fargo. Next week will have results from 35 issuers including Bank of America, Citi, Morgan Stanley in banks and JNJ, Sartorius, P&G and Abbott Labs in healthcare/consumer. 

Full piece here: 24.10.11 MNI Credit Weekly.pdf