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EUROPEAN HIGH-YIELD BONDS RETAINED FAVOR, easily outpacing investment-grade debt in net price gains linked to actual trades. Multiple factors conspired to keep investors with a 'risk-on' bias - including the afterglow of victory by France's centrist Emmanuel Macron, upbeat trade data out of Germany, and a pullback in the euro. A string of gains in European shares rounded out the risk-tolerant tone, as the pan-European Stoxx 600 equities index moved to the solid green.

'RISK-ON' BIAS TOOK AN UPTURN as increased bids for yield over quality ushered in, on the heels of yesterday's May Day holiday. This bias was fed in large part by strong euro-zone factory data, with manufacturing PMI coming in at a six-year high in April. Solid gains in Europe's equities were important elements in today's market, as the U.K.'s heavyweight oil firm BP PLC posted a 2.9% gain in shares, while Ocado Group PLC jumped 8.9% on M&A news. Meanwhile the pan-European Stoxx 600 moved to a 'sea of green', as gains in the financial and energy sectors rounded out the firmer market tone.

CAUTION AMID BREXIT PROCEEDINGS  prevailed, keeping European  investment-grade bonds with a svelte edge in net price gains linked to actual trades. Resistance to major gains in risk assets - including equities and junk debt - ensued after U.K. Prime Minister Theresa May pulled the trigger on official exit from the European Union, invoking Article 50 of the Treaty of Lisbon. The resulting drawdown in the British pound helped buoy the U.K.'s FTSE index, while high-yield bonds in the mining sector drew strength from a 2.7% gain in BHP Billiton shares.

FLUCTUATIONS AROUND THE NEUTRAL LINE were observed for prices of a spectrum of corporate bonds, on the European trading front. Political risk linked to France was toned down, after a strong showing by French centrist candidate Immanuel Macron, outpacing far-right populist Marine Le Pen in an initial debate. The euro gained relative to its peers, while Italian banks notched higher amid the view that Le Pen's momentum proposing a French exit exit from the EU (European Union) took a hit. Banco BPM, Intesa Sanpaolo, and Unicredit SpA shares all posted share gains, while independently Deutsche Bank AG added 2.4%. Gains in Akzo Nobel NV and a pullback in Belgium's UCB shares also provided sector cues.