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US Treasury yields continued to tick higher, with the 10Y up 7bp and 2Y up 3bp. Atlanta Fed President Raphael Bostic urged the Fed to proceed cautiously towards interest-rate cuts given the potential economic impact of unpredictable events, including elections and conflicts. The FOMC voting member also said he wants to see more evidence that inflation is on track to reach the 2% target. US IG CDS spreads tightened 1.2bp and HY spreads tightened 6bp. S&P rose 0.9% and Nasdaq was up 1.4%, thanks to a rally in some of the world’s largest technology companies.
European equity markets ended higher too. Credit markets in the region saw the European main CDS spreads tighten by 1.4bp and crossover spreads tighten by 4.6bp. Asian equity markets have opened weaker again today. Asia ex-Japan IG CDS spreads tighten by 2.9bp.
Rising stars are companies that have recently seen credit rating upgrades that pull its rating to investment grade category from its previous junk or high yield category. They are termed as rising stars as their financial and/or operational metrics show an improving trend. The opposite of rising stars are fallen angels, which are issuers that have been recently downgraded to junk category from its previous investment grade rating category.
On ‘Animal Spirits’ Are Back on Expectations of Lower Rates – Blackstone’s Steve Schwarzman
The Fed’s timing on rate declines won’t be clear, creating a “baffling effect” among investors… expectation that interest rates are going down is creating animal spirits again… like to see what the public thinks”
On Distressed Investors Seek to Raise $1 Billion for Office Debt
Ethan Penner, Reven Office REIT
“We see today tremendous dislocation in the commercial real estate world, most primarily in office”
Chad Carpenter, Reven Office REIT
“I don’t think we’re anywhere close to the bottom. We want experienced borrowers. This is not a time for rookies. There’s a lot of risk out there”
On India Central Bank Not Discussing Rate Cuts Yet – RBI Governor, Shaktikanta Das
“Unless we see clear evidence that inflation is going to sustain at that level, it will be premature to talk about rate cuts… The topic of rate cuts is not even under discussion”
On Nedbank Seeing Sovereign Health as Biggest Risk for Africa
“We’ve seen that play out in Ghana and Zambia, as those have very strong knock-on effects into the banking system… That concern about sovereign health and, what it means for the banks, is still the No. 1 risk”
Commerzbank Buys Asset Manager Aquila as Part of Growth Push
JetBlue’s $3.8 billion buyout of Spirit Airlines blocked by judge citing threat to competition