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CREDIT PRE-MARKET
  • Strong demand (reports of continuing real money buying) saw $IG deals continue pricing flat to secondary (NIC's 1.4bps), books covered 4.8*. No signs of a reversal in €IG prints this morning, RE continuing to drive moves - €HY has now at its lowest levels since early Feb '22 aided by strong moves along Heimstaden's curve & unlike $HY, CCC's not left behind/compressing. Index yields now at levels closer to when ECB began hiking. As a tailwind for fundamentals ahead, it is keeping a lid on refi costs, particularly as rates reverse easing priced - across both $/€ IG refi costs still 100bps shy of last years peaks. Equities trading unch-to-higher and rates -3bp ahead of US morning trade. Quiet on earnings ahead of financials & Delta reporting tomorrow.
  • $ swap spreads are holding onto 1bp of tightening post William's comments that the Fed is not close to point of slowing asset run-off ("In its plans, the FOMC said that to ensure a smooth transition it intends to slow and then stop the decline in the size of the balance sheet when reserve balances are somewhat above the level it judges to be consistent with ample reserves.10 So far, we don’t seem to be close to that point.”) - spreads still +1 wider on the week after Logan comments on the weekend - some analyst see QT ending earlier as a tailwind for credit spreads, likely a view shared by equity strategist that have enjoyed drawing links between CB BS & equity market performance.
  • Outside of CPI today we also have CB speak - Eco sees focus on Mester at 4:40pm London/11:40am ET - a '24 V retiring in June & relative hawk but surprised last month disclosing she had 3 cuts for this year - also of note given CPI, she remarked in her last appearance (mid-Dec, FT) that slowing inflation increases real rates (if nominal held unch). Barkin is also a '24 V coming an hour later (after Lon. close) though his speech is not new but will come with Q&A. Our CPI Preview from US Eco was out earlier, March cuts (~17bps priced currently) will be in focus. Weekly claims that comes with CPI - neither is reference week for payrolls - should take a backseat today.
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