US Treasury yields jumped on Friday with US PPI data for November coming stronger at 7.4% vs expectations of a 7.2% print. The curve bear steepened (Term of the Day, explained below) with the 10Y and 30Y yields surging 10-13bp higher. The peak Fed Funds rate was 2bp higher to 4.97% for the May 2023 meeting. The probability of a 50bp hike at the FOMC’s meeting next week stands at 75%. US IG and HY CDS spreads tightened 1.2bp and 6.4bp respectively. US equity markets continued to move lower with S&P and Nasdaq down 0.7% each on Friday.

European equity markets ended higher. EU Main CDS spreads tightened 2.9bp and Crossover spreads tightened by 11.5bp. Asian equity markets have opened slightly higher today. Asia ex-Japan CDS spreads tightened by 2.3bp.

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New Bond Issues

New Bond Issues 12 Dec 22

New Bonds Pipeline

  • Korea Investment & Securities hires for $ Green bond
  • Zhongrong International Trust hires for $367mn Short 1Y bond
  • TSMC Arizona hires for $ bond


Rating Changes


Term of the Day

Bear Steepening

Bear Steepening refers to a move in the yield curve where the longer-dated bond yields move higher than the shorter-dated bond yield (far maturity bonds sell-off more than near maturity ones). A bear steepening move can occur due to different reasons some of them being long term expectations of inflation picking up, higher supply of longer-dated bonds, central bank tapering purchases with a focus on the long-end bonds etc.


Talking Heads

On Bonds Being a Recession-Proof 2023 Trade – BlackRock iShares, Gargi Chaudhuri, head of investment strategy for the Americas

“We lived in a decade and a half of the TINA world. And now it is so exciting, I think, to be in a world where there are some incredible opportunities staying very high in quality, short in duration, in the fixed-income markets and on yields that we could have only dreamed about because bonds are back — because it’s BARB.”

On US inflation being much lower by end 2023 – US Treasury Secy, Janet Yellen

“I believe by the end of next year you will see much lower inflation if there’s not … an unanticipated shock… There’s a risk of a recession. But … it certainly isn’t, in my view, something that is necessary to bring inflation down…. I think we’ll see a substantial reduction in inflation in the year ahead”

On Credit Market Investors Watching for a Federal Reserve Pivot

Barclays strategists Bradley Rogoff and Dominique Toublan
“Acute attention will be placed on the FOMC for any signals of future rate hike and terminal rate expectations given mixed data recently”


Top Gainers & Losers – 12-December-22*

BondEvalue Gainer Losers 12 Dec 22

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