MNI Credit Weekly: Rock Solid

MNI (LONDON) - Executive Summary: Rock Solid
• Spreads showed impressive resilience, widening just over 1bp while primary remained elevated, with rates considerably lower as economic data pointed to slowing growth and bouts of risk off in tech stocks. The persistence of primary through these conditions was noteworthy and speaks to strong underlying demand. Nonetheless, technicals can only be softer after a bout of elevated supply that looks set to continue at a reduced pace. Real Estate remains the darling sector as primary reveals demand and boosts liquidity.
• The macro debate on 25 or 50bp cuts was in focus all week into a highly anticipated NFP. The data was on the soft side, although the debate is far from settled with markets pricing it as a 50/50. France finally has a new Prime Minister, which helps, but the same fiscal challenges remain.
• Primary remained elevated at €18bn, with book sizes holding up better than last week, returning near YTD averages.
• Fund flows remain firm in credit even as equities and govvies faced outflows. This continues to support issuance as both Europe and the US saw heavy supply.
Full piece here: 24.09.06 MNI Credit Weekly.pdf