This site uses cookies to provide you with a great user experience. By using BondbloX, you accept our use of cookies.
US Treasury yields continued to rise across the curve with the 2Y closing at 4.99% and the 10Y rising to 4.38%. The Fed released its 25-26 July meeting minutes, where while most Fed members continued to see significant upside risks to inflation, there was no consensus on further rate hikes. The CME probability of a 25bp rate hike rose 4% to 13.5% for the September meeting, and similarly rose 4% to 38% for the November meeting. US IG credit spreads were wider by 1.5bp and HY CDS spreads widened by 8.5bp. The S&P and Nasdaq closed lower by ~0.8% and ~1.1%, respectively.
European equity markets ended lower. In credit markets, European main CDS spreads were 0.8bp wider and Crossover CDS widened 4.8bp. The fear of contagion risks from concerns over Country Garden’s liquidity position, coupled with weak economic data from China led Asia ex-Japan CDS spreads to widen by ~21bp this week, closing at 121.2bp. Asian equity markets have opened broadly lower this morning.
Guacolda Energia SpA Downgraded To ‘D’ From ‘CC’ On Completion Of Tender And Exchange Offer
Greenium is a term that refers to the premium that investors pay when buying green bonds vs. conventional non-green bonds. Green bonds that trade with a greenium indicate strong investor demand for those bonds, which pushes prices higher and yields lower compared to conventional bonds.
As per AllianceBernstein, as issuance of ESG-labelled bonds has increased since 2018, the greenium on ESG bonds has shrunk over time.
On 10Y Treasury Being At Good Entry Point
Steven Major, global head of fixed-income research at HSBC Plc
“I think we’ll be nearer to three than five in a year’s time” on the 10-year yield. Going up the US curve to 10 year-plus is now looking more and more interesting because we’re at the top of the range and more fundamentally the real yield is covering the trend GDP.”
On Contagion Effect in China Property Sector
Sheldon Chan, a portfolio manager at T. Rowe Price
“The repercussions of Country Garden’s missed coupon payments could extend beyond the company itself, impacting other private property developers and potentially triggering a contagion effect”
On Markets Not Reflecting China’s Deteriorating Fundamentals
Tiffany Wilding, an economist and managing director at Pacific Investment Management Co.
“Given the usual lags, deflationary spill-overs have likely only just begun to impact global consumer markets. Discounting is likely to accelerate over the coming quarters.”
On Widening Bond Yield Gap Between China And US
David Chao, global market strategist at Asia Pacific at Invesco.
“More broadly, recent economic data releases in China have been disappointing, while those in the U.S. have surprised to the upside. The significant yield gap, the largest since 2007, could be a key reason why capital remains planted in US dollars and US Treasuries for the time being.”