This site uses cookies to provide you with a great user experience. By using BondbloX, you accept our use of cookies.
US Treasury yields were steady on Wednesday. US ISM Services PMI fell to 51.4 in March from 52.6 in February, and lower than expectations of 52.8. It was the second straight monthly decline since rebounding in January. Among the subcomponents, the Prices Paid Index dropped to 53.4, the lowest reading since March 2020, from 58.6 in February. Separately, US ADP Payrolls rose 184k in March from 155k, and was higher than expectations of`150k. Fed Chairman Jerome Powell said that it would be “too soon” to conclude that the higher recent inflation readings are “more than just a bump”. He restated that “if the economy evolves broadly as we expect, most FOMC officials see it as likely appropriate to begin lowering the policy rate at some point this year”. Credit markets saw the US IG CDS spreads tighten 0.7bp and the HY spreads tighten 2.8bp. Looking at equity indices, S&P and Nasdaq ended higher by 0.1% and 0.2% respectively.
European equity indices ended higher. European IG CDS spreads tightened 1bp and crossover spreads were 4.6bp tighter. Asian equity markets have opened mixed today. Asia ex-Japan IG CDS spreads were 1.7bp tighter.
Rakuten raised $2bn via a 5Y bond at a yield of 9.875%, 12.5bp inside initial guidance of 10% area. The senior unsecured bonds are rated BB. Proceeds will be used to redeem and/or repurchase senior bonds due 2024 or later. The deal was upsized from the planned $1.25bn.
Banco BTG Pactual raised $500mn via a 5Y bond at a yield of 6.45%, 30bp inside initial guidance of 6.75% area. The senior unsecured bonds are rated Ba2/BB. Proceeds will be used for general corporate purposes.
The iTraxx Crossover Index is a credit default swap (CDS) based index compiled by IHS Markit (now part of S&P Global) which consists of the 75 most liquid sub-investment grade entities in Europe. The index helps track credit risk in the European high yield market, akin to the Markit HY CDS Index in the US. Performance is tracked in terms of the index’s value and the move in the spreads of the index. A tightening (a move lower) in its CDS spreads implies an easing of credit conditions in the European junk-bond markets which leads to an increase in the value of the index. On the other hand, a widening in its spread (a move higher) implies a worsening in credit conditions, which would lead to a fall in the index’s value. While the iTraxx Crossover Index helps track European high yield spreads, the iTraxx Main index helps track European investment grade spreads. The iTraxx Main index consists of 125 of the most liquid European entities with IG-ratings as published by Markit from time to time.
On Defending Decades-Long Investment in China – Ray Dalio, Bridgewater Founder
“I don’t jump in when things are booming and jump out when things are tough… Chinese policymakers are able to “manage how to deal with political, geopolitical, nature, and technology forces well”…see China as one of “15 or more good uncorrelated return streams”
On ‘Exciting Market’ for Japan Bonds After BOJ – Citigroup
Kazuhiro Nakajima, deputy head of sales and solutions
“It’s going to be a very exciting market… Normalization has started, so we foresee a lot of activity going forward… It was very difficult to secure time to pitch to overseas investors when China was hot. Everything is coming at the right time”
On US dollar, gold rises are ‘anomalies’ – Bridgewater Co-CIO, Karniol-Tambour
Recent appreciations of the dollar and gold are “anomalies” and the greenback should not be so strong due to the U.S. deficit… Geopolitical fears could explain the metal’s price high prices