European Bond Research - July 25, 2019

Posted by Corey Mahoney on Jul 25, 2019 1:47:22 PM
THE EUROPEAN CENTRAL BANK SIGNALED FOR ADDITIONAL MONETARY EASING in the months ahead resuming its mass bond-buying program in November.  TD Securities Analysts say, The ECB “is clearly preparing for a package of policy easing in September.”  Negative interest rates have rippled across Europe offering investors no incentives to purchase sovereign bonds.  FTSE 100 -0.20%, German DAX -1.61%, CAC 40 -0.82%, STOXX Europe 600 -0.82%.  The 10-year Gilt advanced 2.1 basis points.  

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GERMAN CHEMICAL CONGLOMERATE BASF DECLINED 2.21 percent after announcing earnings took a significant hit due to lower volume and a dip in margins.  The earnings release coincides with a report German manufacturing entered recession territory at an 84-month low.  Domestic industrial weakness has significantly affected the economy particularly the automotive sector.  Lotto Sport Italia an Italian clothing manufacturer stated, “We have seen an increasingly erratic demand in Europe in the last quarters, therefore we are looking to expand our business in other areas with higher growth potential, such as China and Southeast Asia.” ADI (Advantage Data Inc.).  Extensive corporate-bond index data showed a net daily yield increment for high-grade versus high-yield constituents. High-yield bonds edged out high-grade debt as of 3 PM, London time.  Among European high-yield bonds showing a concurrence of top price gains at appreciable volumes traded,  Turkiye Vakiflar Bankasi (USD) 5.625% 5/30/2022 Reg  made some analysts' 'Conviction Buy' lists. (See the chart for Turkiye Vakiflar Bankasi  below). Corey Mahoney (


Credit-Default Swap Market

LATEST NEWS: Top moves, sovereign tighteners (5Y): UK 29 bp and Korea 29 bp. Sovereign wideners (5Y): France 20 bp and Italy 154 bp.

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New Issuance

New Issues New Issues [Continued]

(None Current 07/25/2019)



ADI Indexes

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iShares Core EUR UCITS iShares Euro High Yield UCITS
NAV as of 07/25/2019, 134.98 NAV as of 07/25/2019, 105.56
Daily NAV Change (%) +0.07% Daily NAV Change (%) +0.08%

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 ratecurrently 7.5% (seasonally adjusted, May 2019)
  • Eurostat's quarterly GDP: 0.4% (2019 Q1)
  • 6-month Euribor: current value -0.368%, as of 07/24/2019

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Topics: Analytics, bonds, junk bonds, bond market, corporate bonds, market analytics, New Issues, News, research, EU, market update, European

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