Credit spreads: The CDX Investment Grade credit spread narrows another ~10bps to ~107. The spread was in the 40-50bps range before dislocation and reached a wide of ~154bps on March 20. The CDX High Yield credit spread is down ~28bps to ~672bps. This was in
OPEC+ will hold an emergency meeting Monday, but the probability of anything close to a 10M barrel per day cut remains low. Russia’s willingness to cut if the US and Saudis also cut, suggests US shale production was probably the biggest reason Russia refused to
OPEC+ will hold an emergency meeting Monday, but the probability of anything close to a 10M barrel per day cut remains low. Russia’s willingness to cut if the US and Saudis also cut, suggests US shale production was probably the biggest reason Russia refused to
Trump’s comment about a “ten million barrel and possibly more” Saudi/Russia production cut was more than enough to start today’s short-squeeze in deeply oversold crude prices. A lack of detail creates understandable skepticism in other markets with HY credit spreads only contracting by 11bps to
From a market stability perspective, the most important piece of last week’s fiscal bill was the $400B Treasury ESF that becomes ~$4T in liquidity with Fed leverage. From an economic perspective, the most important piece will be the $350B small business coronavirus loan program that
Reports citing progress in Seattle and New Rochelle helped sentiment yesterday. More reports today discuss relative success from early social distancing measures in California. NYC is still the main area of concern with higher infection rates, crowded hospitals, lack of adequate supplies and higher mortality
The ~13.5% bounce off last Monday’s closing low followed a narrowing in high yield credit spreads from ~885bps to last Friday’s closing level of ~620bps. Investment Grade corporate spreads also improved from ~158bps to ~112bps during the week. Both are a touch wider this morning
The Fed’s various liquidity facilities have eased some market stress, evidenced by the contraction in High Yield credit spreads. Monday was the widest at ~861bps and they’ve since narrowed to 590bps. As discussed last week, the narrowing of HY credit spreads would be the likely
The S&P 500 is bouncing off deeply oversold levels after a successful two-session reversal (Monday and Tuesday). At the moment, the SPX has rallied +15.5% from Monday’s low, which matches our expectations for a 10-25% oversold bounce. Technical resistance lies just ahead at ~2650 and
The most significant piece of the $2T US fiscal stimulus is the $400B Treasury Exchange Stabilization Fund, which the Fed can lever to ~$4T. Anticipation for the ESF compressed high yield credit spreads by 154 bps to 717bps. High yields spreads narrow further today by
