HIGH-YIELD BONDS OUTPACED INVESTMENT-GRADE in net prices linked to actual trades. Treasury prices dipped sending yields higher, the 10-year Treasury note rose 3.8 basis points and the 30-year notegained 2.4 basis points. Gold slid to its lowest point in 2019 as a risk-on appetite picks up sending equity indexes near record highs. S&P +0.14%, DOW +0.31%, NASDAQ +0.45%.
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HIGH-YIELD BONDS OUTPACED INVESTMENT-GRADE
in net prices linked to actual trades. Treasury prices dipped sending yields higher, the
10-year Treasury note
rose 3.8 basis points and the
30-year note
gained 2.4 basis points
.
Gold
slid to its lowest point in 2019 as a risk-on appetite picks up sending equity indexes near record highs.
S&P
+0.14%,
DOW
+0.31%,
NASDAQ
+0.45%.
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U.K. WAGES GREW AT THE FASTEST PACE IN OVER A DECADE
increasing by 3.5 percent in the last quarter. Matt Hughes a labor market analyst stated
, "Earnings have now been growing ahead of inflation for over a year, but in real terms, wage levels have not yet returned to their pre-downturn peak."
Britain’s
unemployment hit a four-decade low
of 3.9 percent indicating the
Brexit stalemate
has not negatively impacted the labor market, in addition,
employment hit a new all-time
high
of 76.1 percent. The
UK 10-year Gilt
dipped 0.1 basis points.
FTSE 100 +0.52%,
German DAX +0.68%,
CAC 40 +0.33%,
STOXX Europe 600 +0.68%.
EUROPEAN EQUITIES ADVANCED FOR THE FIFTH CONSECUTIVE DAY lifted by bank and retail earnings,
“This optimism is really feeding into the European banking sector as well. When they will start to announce their earnings, the expectations are high…”
said Naeem Aslam, chief market analyst at TF Global Markets
. Italy significantly cuts its 2019 GDP forecast
to 0.1 percent from 1 percent and
increased its budget deficit
forecast to 2.5 percent, which
surpasses the allotted 2.04 percent
deficit issued by the European Union. Italy’s largest bank,
UniCredit SpA
, agreed to pay $1.3 billion to the U.S. Government pledging guilty to federal and state criminal charges using the U.S. financial system to
illegally move hundreds of millions of dollars in violation of U.S. sanctions on Iran.
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,
Viacom Inc. (USD) 5.875% 2/28/2057 made some analysts' 'Conviction Buy' lists. (See the chart for
Viacom Inc. bonds below).
Corey Mahoney (
cmahoney@advantagedata.com).
Sovereign-Debt Snapshot
| Country |
Maturity (Y) |
Yield (%) |
Previous (%) |
Spread (bp) |
| Australia |
10 |
1.893 |
1.869 |
-66.5 |
|
| Belgium |
10 |
0.495 |
0.434 |
-206.2 |
|
| France |
10 |
0.402 |
0.334 |
-215.5 |
|
| Germany |
10 |
0.059 |
-0.007 |
-249.9 |
|
| Italy |
10 |
2.395 |
2.372 |
-16.2 |
|
| Japan |
10 |
-0.048 |
-0.059 |
-260.5 |
|
| Netherlands |
10 |
0.134 |
0.073 |
-242.3 |
|
| Portugal |
10 |
1.169 |
1.130 |
-138.8 |
|
| Spain |
10 |
1.053 |
1.009 |
-150.4 |
|
| Sweden |
10 |
0.264 |
0.228 |
-229.3 |
|
| U.K. |
10 |
1.214 |
1.150 |
-134.3 |
|
| U.S. |
10 |
2.557 |
2.498 |
... |
Credit-Default Swap Market
LATEST NEWS:
Top moves, sovereign tighteners (5Y): China 41 bp and Finland 12 bp. Sovereign wideners (5Y): France 27 bp and Germany 11 bp.
New Issuance
| New Issues |
New Issues [Continued] |
| 1. Basellandsch KTBK (CHF) 0.375% 5/13/2030 (04/15/2019):180MM Senior Unsecured Notes, Price at Issuance 100.865, Yielding .3%. |
|
ADI Indexes
DATA CHECK:
| iShares Core EUR UCITS |
iShares Euro High Yield UCITS |
| NAV as of 04/16/2019, 131.41 |
NAV as of 04/16/2019, 104.55 |
| Daily NAV Change (%) +0.03% |
Daily NAV Change (%) +0.11% |
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 7.8% (seasonally adjusted, February 2019)
- Eurostat's quarterly GDP: 0.2% (2018 Q3 Final)
- 6-month Euribor: current value -0.231%, as of 04/15/2019
Copyright 2019 Advantage Data Inc. All Rights Reserved. http://www.advantagedata.com
Information in this document should not be regarded as an offer to sell or solicitation of an offer to buy bonds or any financial instruments referred to herein. All information provided in this document is believed to be accurate. However, Advantage Data and its sources make no warranties, either express or implied, as to any matter whatsoever, including but not limited to warranties of merchantability or fitness for a particular purpose. Opinions in this document are subject to change without notice. Electronic redistribution, photocopying and any other electronic or mechanical reproduction is strictly prohibited without prior written permission from Advantage Data Inc.
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European
JUNK BONDS RETAIN A SLIGHT EDGE OVER INVESTMENT-GRADE DEBT in net prices linked to actual trades despite lackluster bank earnings. Goldman Sachs sank 3.41 percent upon releasing weaker than expected revenue for the first quarter, meanwhile, Citigroup reported a rise in profit by 2 percent from a year ago lifted by an expansion in U.S. consumer banking. “Both our consumer and institutional businesses performed well and we saw good momentum in those areas where we have been investing,” stated Chief Executive Mike Corbat. 10-year Treasury note slipped 1.9 basis points. S&P -0.07%, DOW-0.11%, NASDAQ -0.07%.
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JUNK BONDS RETAIN A SLIGHT EDGE OVER INVESTMENT-GRADE DEBT
in net prices linked to actual trades despite
lackluster bank earnings
. Goldman Sachs sank 3.41 percent upon releasing
weaker than expected revenue
for the first quarter, meanwhile,
Citigroup reported a rise in profit
by 2 percent from a year ago lifted by an
expansion in U.S. consumer banking
. “Both our consumer and institutional businesses performed well and we saw good momentum in those areas where we have been investing,” stated Chief Executive Mike Corbat.
10-year Treasury note
slipped 1.9 basis points
. S&P
-0.07%,
DOW
-0.11%,
NASDAQ
-0.07%.
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UK ECONOMY LEANS ON CONSUMERS AS BREXIT DRAGS
ON BUSINESSES.
Britain’s economy only grew 1.4 percent in 2018, the weakest increase in
six years. Bank of England’s Governor,
Mark Carney, stated: “When the economy is reliant on consumers, growth becomes very one-dimensional.”
Bank of England has signaled not raising interest rates
allowing cheaper capital to circulate around the economy. The value of business investment lost in Britain’s economy since the June 2016 referendum is roughly 10 billion pounds. Business investment fell every quarter of 2018, the longest decline since the 2008 financial crisis. The
UK 10-year Gilt
increased two-basis points.
FTSE 100 -0.03%,
STOXX Europe 600
+0.14%,
CAC 40 +0.09%,
German DAX +0.18%.
TRADE NEGOTIATIONS between the EU and the United States will not be easy, “but both sides should benefit in the end,
German economy Minister Peter Altamaier
said on Monday." The goal is to reduce tariffs to zero and ultimately fend off a trade conflict. Negotiations will commence later this week and will continue for the upcoming months. Among European high-yield bonds showing a concurrence of top price gains at appreciable volumes traded,
Barclays PLC (USD) 4.375% 9/11/2024 made some analysts' 'Conviction Buy' lists. (See the chart for
Barclays PLC bonds
below).
Niral Mehta (
nmehta@advantagedata.com).
Sovereign-Debt Snapshot
| Country |
Maturity (Y) |
Yield (%) |
Previous (%) |
Spread (bp) |
| Australia |
10 |
1.893 |
1.869 |
-66.5 |
|
| Belgium |
10 |
0.495 |
0.434 |
-206.2 |
|
| France |
10 |
0.402 |
0.334 |
-215.5 |
|
| Germany |
10 |
0.059 |
-0.007 |
-249.9 |
|
| Italy |
10 |
2.395 |
2.372 |
-16.2 |
|
| Japan |
10 |
-0.048 |
-0.059 |
-260.5 |
|
| Netherlands |
10 |
0.134 |
0.073 |
-242.3 |
|
| Portugal |
10 |
1.169 |
1.130 |
-138.8 |
|
| Spain |
10 |
1.053 |
1.009 |
-150.4 |
|
| Sweden |
10 |
0.264 |
0.228 |
-229.3 |
|
| U.K. |
10 |
1.214 |
1.150 |
-134.3 |
|
| U.S. |
10 |
2.557 |
2.498 |
... |
Credit-Default Swap Market
LATEST NEWS:
Top moves, sovereign tighteners (5Y): Belgium 23 bp and Finland 12 bp. Sovereign wideners (5Y): France 27 bp and China 41 bp.
New Issuance
| New Issues |
New Issues [Continued] |
| 1. Basellandsch KTBK (CHF) 0.375% 5/13/2030 (04/15/2019):180MM Senior Unsecured Notes, Price at Issuance 100.865, Yielding .3%. |
|
ADI Indexes
DATA CHECK:
| iShares Core EUR UCITS |
iShares Euro High Yield UCITS |
| NAV as of 04/15/2019, 131.30 |
NAV as of 04/12/2019, 104.39 |
| Daily NAV Change (%) -0.02% |
Daily NAV Change (%) +0.05% |
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 7.8% (seasonally adjusted, February 2019)
- Eurostat's quarterly GDP: 0.2% (2018 Q3 Final)
- 6-month Euribor: current value -0.232%, as of 04/12/2019
Copyright 2019 Advantage Data Inc. All Rights Reserved. http://www.advantagedata.com
Information in this document should not be regarded as an offer to sell or solicitation of an offer to buy bonds or any financial instruments referred to herein. All information provided in this document is believed to be accurate. However, Advantage Data and its sources make no warranties, either express or implied, as to any matter whatsoever, including but not limited to warranties of merchantability or fitness for a particular purpose. Opinions in this document are subject to change without notice. Electronic redistribution, photocopying and any other electronic or mechanical reproduction is strictly prohibited without prior written permission from Advantage Data Inc.
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RISK-ON SENTIMENT INTENSIFIED FOLLOWING A SLEW OF POSITIVE EARNINGS as the Dow Jones Industrial Average spiked 230 points. J.P. Morgan and Disney were among the companies that reported on Friday, J.P. Morgan announced the “impact of higher rates” elevated earnings, JPM closed 4.5 percent higher. Disney surged 11 percent after revealing a rival streaming service to Netflix. Economic concerns have dissipated, “Strength in [JPMorgan’s] consumer franchise shows that despite the uncertainty in the fourth quarter of last year, consumers continue to spend and give strength to the overall U.S. economy”. 10-year Treasury note rose 6.4 basis points. S&P +0.64%, DOW +0.96%, NASDAQ +0.44%.
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RISK-ON SENTIMENT INTENSIFIED FOLLOWING A SLEW OF POSITIVE EARNINGS
as the Dow Jones Industrial Average
spiked 230 points. J.P. Morgan and Disney were among the companies that reported on Friday,
J.P. Morgan announced the “impact of higher rates”
elevated earnings, JPM closed 4.5 percent higher.
Disney surged 11 percent
after revealing a rival streaming service to Netflix. Economic concerns have dissipated,
“Strength in [JPMorgan’s] consumer franchise shows that despite the uncertainty in the fourth quarter of last year, consumers continue to spend and give strength to the overall U.S. economy”.
10-year Treasury note rose 6.4 basis points
. S&P
+0.64%,
DOW
+0.96%,
NASDAQ
+0.44%.
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GERMAN GOVERNMENT EXPECTS THE ECONOMY TO GROW BY 0.5 PERCENT THIS YEAR, LOWER THAN A RECENT ESTIMATE OF 0.8. German Finance Minister mentioned, “
The economy is losing momentum but still growing, with private consumption and state spending expecting to support overall growth this year.”
Unresolved trade disputes, Brexit uncertainty and a sluggish world economy have hit foreign demand and hurt manufacturers.
Stricter pollution standards are challenging the country’s car manufacturers, a critical component of their GDP. If
the slowdown worsens, it will put pressure on the ECB to provide more
stimulus for the Eurozone economy. The
UK 10-year Gilt
increased six-basis points.
FTSE 100 -0.14%,
STOXX Europe 600
+0.11%,
CAC 40 +0.33%,
German DAX +0.54%.
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TREASURY YIELDS ROSE ON THURSDAY upon the release of positive economic data on the labor market calming fears of a slowing economy, 10-year Treasury note increased 3.4 basis points. Equities settled lower as investors anticipate a lackluster quarterly earnings season set to kick off this Friday. Chief equity strategist Terry Sandven at U.S. Bank Wealth Management sees opportunity, “Expectations for first-quarter results have been ratcheted down on the heels of sluggish global growth, so the bar is low and it could set the stage for upside surprises”. S&P -0.11%, DOW -0.19%, NASDAQ -0.31%
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