European Bond Research - July 29, 2019

FRENCH PHARMACEUTICAL GIANT SANOFI RALLIED ON MONDAY following revised full-year earnings guidance suggesting 5 percent growth, the stock advanced 2.31 percent. Sanofi bonds also traded notably higher in particular, Sanofi (EUR) 1.25% 3/21/2034. The growth was driven by the launch of a new brand Dupixent, in addition, “Our increased focus in R&D delivered important results with several positive data read-outs and the achievement of regulatory milestones.” FTSE 100 +1.87%, German DAX +0.06%, CAC 40 -0.06%, STOXX Europe 600 +0.18%.  The 10-year Gilt lost 3.6 basis points. 

EUROPEAN COMMISSION OFFICIALS ANNOUNCED BRITAIN will not have immediate access to European financial markets after Brexit even if regulations are identical. Per the commission, “It should be noted that equivalence empowerments do not confer a right on third countries ... to receive an equivalence determination, even if those third countries are able to demonstrate that their framework fulfills the relevant criteria.” The impact on UK financial markets and financial services will be extreme without access to the European Markets, especially within the insurance industry. 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,   GlaxoSmithKline Capital Inc. (USD) 2.85% 5/8/2022  made some analysts' 'Conviction Buy' lists. (See the chart for GlaxoSmithKline Capital Inc.  below). Corey Mahoney (cmahoney@advantagedata.com).

LATEST NEWS: Top moves, sovereign tighteners (5Y): Korea 28 bp and China 39 bp. Sovereign wideners (5Y): Indonesia 78 bp and Panama 52 bp.

New Issues	New Issues [Continued]
(None Current 07/29/2019)

DATA CHECK:

iShares Core EUR UCITS	iShares Euro High Yield UCITS
NAV as of 07/29/2019, 135.13	NAV as of 07/29/2019, 105.60
Daily NAV Change (%) +0.11%	Daily NAV Change (%) -0.09%

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 -0.362%, as of 07/26/2019

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