September 27, 2024 13:11 GMT
Spreads vs. Equities
CREDIT MACRO
Risk-on rally in equities has not extended to credit spreads. Supply and rates (that are keeping a lid on yields) may be the x-factors.
Bunds are -10bps on the week strong outperformance on UST's +2bp move; growth concerns from PMIs early in the week paired with weaker inflation prints today were the driving forces. €IG spreads did underperform vs. $IG (+2 vs. -1).
YTD drivers of returns remain unch; US duration and carry; $IG total returns at 5.2% - climbing past us despite lacklustre spread moves - while €HY rode the bund rally to move to over 6% YTD.