EUROPEAN MARKETS RALLY FOLLOWING a number of upbeat earnings propelling the indices higher on Tuesday.  The DAX gained nearly 2 percent as German luxury automotive giant Daimler spiked 4.77 percent following an announcement Chinese automotive group BAIC bought a five percent stake in Daimler.  FTSE 100 +0.8%, German DAX +1.93%, CAC 40 +1.26%, STOXX Europe 600 +1.20%.  The 10-year Gilt dipped 2.4 basis points.   

BANKS ACROSS THE EURO BLOC ABRUPTLY TIGHTENED LENDING CONDITIONS in the second quarter of 2019 according to an ECB survey.  "Lower risk tolerance and, for loans to enterprises, heightened risk perceptions, accompanied by higher cost of funds and balance sheet constraints, contributed to the tightening of credit standards across loan categories."  UBS CEO Sergio Ermotti raises the alarm of a “very dangerous development” surrounding the balance sheets of central banks building “an asset bubble.”    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,  Deutsche Bank AG (USD) 3.375% 5/12/2021 made some analysts' 'Conviction Buy' lists. (See the chart for Deutsche Bank AG below). Corey Mahoney (cmahoney@advantagedata.com).

 

LATEST NEWS: Top moves, sovereign tighteners (5Y): China 41 bp and UK 29 bp. Sovereign wideners (5Y): Ireland 27 bp and Spain 38 bp.

New Issues	New Issues [Continued]
1. Cranbrook SA (EUR) 4% 1/31/2029 (07/23/2019): 58MM Senior Unsecured Notes, Price at Issuance 108, Yielding 3.03%. 2. Raiffeisen Bank Intl. AG (HUF) 1.6% 8/6/2024 (07/23/2019):20000MM Senior Unsecured Notes, Price at Issuance 100, Yielding 1.6%.

DATA CHECK:

iShares Core EUR UCITS	iShares Euro High Yield UCITS
NAV as of 07/23/2019, 134.52	NAV as of 07/23/2019, 105.27
Daily NAV Change (%) +0.13%	Daily NAV Change (%) +0.13%

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 -0.361%, as of 07/22/2019

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