European Bond Research - October 30, 2019

EUROPEAN STOCKS WERE MIXED TODAY amid the Brexit stalemate. British Prime Minister Boris Johnson hopes to appeal to the Liberal Democrats and Scottish National Party, in order to draw a vote for secession on December 9^th. The proposition of holding an election in December is the subject of widespread disagreement between parties. FTSE 100 +0.06%, German DAX -0.38%, CAC 40 +0.13%, STOXX Europe 600 -0.16%. The 10-year Gilt fell 2.7 basis points.

IN THE EUROPEAN LABOR MARKET, some employers believe there is a skills gap causing manufacturing jobs to go unfilled. In Italy, this is due in part to decreased enrollment in vocational schools and an overall negative sentiment towards the manufacturing sector. (Advantage Data Inc.).  Extensive corporate-bond index data showed a net daily grade 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,  Ingersoll-Rand Co. LTD (USD) 3.55% 11/1/2024 made some analysts 'Conviction buy' lists. (See the chart for Ingersoll-Rand Co. LTD bonds below). Andrew Robartes

 

LATEST NEWS: Top moves, sovereign tighteners (5Y): Germany 9.045 and Greece 161.31. Sovereign wideners (5Y): France 18.66 and Spain 34.895.

New Issues	New Issues [Continued]
1. Banco de Sabadell SA (EUR) 0.625% 11/7/2025 (10/29/2019): 500MM Senior Unsecured Notes. 2. Eli Lilly & Co. (USD) 1.7% 11/1/2049 (10/30/2019): 1000MM Senior Unsecured Notes, Price at Issuance 99.442, Yielding 1.72%.

DATA CHECK:

iShares Core EUR UCITS iShares Euro High Yield UCITS NAV as of 10/30/2019, 134.25 NAV as of 10/30/2019, 103.27 Daily NAV Change (%) -0.03% Daily NAV Change (%) -0.08%

OVERALL EUROPEAN CREDIT MARKET:
The euro-zone economy shows signs of negative momentum, 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 -0.346%, as of 10/28/2019

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