EUROPEAN INDICES PLUNGE after a statement from the U.S. indicating an additional 10 percent in tariffs on Chinese goods ending a brief trade truce.  Asian and U.S. markets were also trading lower on the announcement.  Oil futures tumbled more than 7 percent overnight marking the largest drop in four years before recovering losses. FTSE 100 -2.38%, German DAX -3.04%, CAC 40-3.39%, STOXX Europe 600 -2.47%.  The 10-year Gilt slipped 4.3 basis points. 

RETAIL SALES ACROSS THE EURO ZONE JUMPED 1.1 percent in June exceeding expectations of a 0.2 percent rise signaling household spending has continued to support growth. “Growth in sales was broad-based with increases across all product groups, led by clothing which was up 3.5% MoM. The outlook remains decent as the labour market continues to add jobs and wage growth is also contributing to better household incomes across the Euro zone.” A separate report indicated producer prices fell in June hinting inflation will slow for the remainder of the summer. ADI (Advantage Data Inc.).  Extensive corporate-bond index data showed a net daily yield increment for high-grade versus high-yield constituents. High-grade bonds edged out high-yield debt as of 3 PM, London time.  Among European high-grade bonds showing a concurrence of top price gains at appreciable volumes traded, Tyco Electronics Group SA (USD) 3.5% 2/3/2022  made some analysts' 'Conviction Buy' lists. (See the chart for  Tyco Electronics bonds  below). Corey Mahoney

 

LATEST NEWS: Top moves, sovereign tighteners (5Y): Italy 165 bp and Korea 28 bp. Sovereign wideners (5Y): China 40 bp and Panama 52 bp.

New Issues	New Issues [Continued]
1. ASR Media And Sponsorship S.R.L (EUR) 5.125% 8/1/2024 Reg S (08/01/2019): 275MM Secured Notes, Price at Issuance 100, Yielding 5.13%. 2. Daimler AG (EUR) 0.375% 11/8/2026 (08/01/2019): 1000MM Senior Unsecured Notes, Price at Issuance 99.893, Yielding .39%.

DATA CHECK:

iShares Core EUR UCITS	iShares Euro High Yield UCITS
NAV as of 08/02/2019, 134.80	NAV as of 08/02/2019, 104.89
Daily NAV Change (%) -0.20%	Daily NAV Change (%) -0.28%

OVERALL EUROPEAN CREDIT MARKET:
The euro-zone economy shows signs of positive momentum, although conditions are expected to deteriorate hindered by the termination of quantitative easing, weakening credit rating quality, and uncertainty regarding the outcome of Brexit. Closely watched indicators and rates:

• Eurostat's unemployment rate: currently 7.5% (seasonally adjusted, May 2019)
• Eurostat's quarterly GDP: 0.4% (2019 Q1)
• 6-month Euribor: current value -0.363%, as of 08/01/2019

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