EUROZONE MANUFACTURING CONTRACTED FOR THE THIRD STRAIGHT MONTH, meanwhile, manufacturing continues to expand in the United States. Weak global demand remains a key issue hurting the European manufacturing sector. On Thursday Bank of England, Governor Mark Carney state investors are overlooking how much interest rates could rise. Analysts continue to overplay the Brexit situation, ”Brexit is really painting the Bank of England into a corner at the moment,”. During the conference, the BoE was optimistic in regards to growth and increased the growth forecast to 1.5 percent from 1.2 percent. 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, HSBC Holdings PLC (USD) 2.95% 5/25/2021 made some analysts' 'Conviction Buy' lists. (See the chart for HSBC Holdings PLC bonds below). Corey Mahoney (cmahoney@advantagedata.com).
Sovereign-Debt Snapshot
| Country | Maturity (Y) | Yield (%) | Previous (%) | Spread (bp) | |
|---|---|---|---|---|---|
| Australia | 10 | 1.791 | 1.799 | -72.2 | |
| Belgium | 10 | 0.446 | 0.446 | -206.7 | |
| France | 10 | 0.368 | 0.368 | -214.5 | |
| Germany | 10 | 0.016 | 0.016 | -249.7 | |
| Italy | 10 | 2.566 | 2.566 | 5.3 | |
| Japan | 10 | -0.029 | -0.029 | -254.2 | |
| Netherlands | 10 | 0.190 | 0.190 | -232.3 | |
| Portugal | 10 | 1.113 | 1.113 | -140.0 | |
| Spain | 10 | 1.005 | 1.005 | -150.8 | |
| Sweden | 10 | 0.162 | 0.162 | -235.1 | |
| U.K. | 10 | 1.153 | 1.188 | -136.0 | |
| U.S. | 10 | 2.513 | 2.502 | ... | |
Credit-Default Swap Market
New Issuance
| New Issues | New Issues [Continued] |
|---|---|
|
1. Credit Suisse Group (USD) 3.142% 4/9/2023 (05/01/2019): 100MM Senior Unsecured Notes. 2. Erste Group Bank AG (EUR) FLT% 5/13/2030 (05/02/2019): 50MM Senior Unsecured Notes, Price at Issuance 100. |
ADI Indexes
| iShares Core EUR UCITS | iShares Euro High Yield UCITS |
| NAV as of 05/02/2019, 131.99 | NAV as of 05/02/2019, 104.03 |
| Daily NAV Change (%) -0.08% | 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 7.7% (seasonally adjusted, March 2019)
- Eurostat's quarterly GDP: 0.4% (2019 Q1 Preliminary)
- 6-month Euribor: current value -0.231%, as of 05/01/2019
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