Advantage Data High Yield Bond Market Summary

ECB’S PRESIDENT, MARIO DRAGHI HINTS AT DRAWBACKS OF NEGATIVE RATES AS BANKS START TO WORRY  about the adverse effects of   negative interest rates. Expectations of easier monetary policy have pushed government bond yields below zero, meanwhile,   cheaper cost of borrowing capital has raised risks of housing bubbles  in part of Europe. European bank stocks have fallen around 30% since the start of 2018 since lower interest rates induce compressed profit margins. Rates are expected to stay where there are for many months, laying the foundation for negative interest rates for years to come.  The   ECB targets an annual   inflation of just under 2%, it is currently at 1.5%. The UK 10-year Gilt   declined one basis point. FTSE 100, -0.41%,  STOXX Europe 600 -0.64%,  CAC 40 -0.28%,  German DAX -0.29%. 

INVESTMENT GRADE-DEBT EDGED OUT JUNK BONDS in net prices linked to actual trades. Housing starts plunged nearly 9 percent in February; the northeast took the most significant hit as permits sank 30 percent. The hottest housing markets, Seattle and San Francisco continue to show signs of cooling off even as interest rates decline. The 10-year U.S. Treasury note rose 1.5 basis point.  S&P +0.37%, Dow +0.27%, NASDAQ +0.32%

INVESTMENT GRADE-DEBT EDGED OUT JUNK BONDS in net prices linked to actual trades. Housing starts   plunged nearly 9 percent  in February; the northeast took the most   significant hit  as permits sank 30 percent. The hottest housing markets, Seattle and San Francisco continue to show signs of cooling off even as interest rates decline. The   10-year U.S. Treasury note rose 1.5 basis point.    S&P  +0.37%,   Dow  +0.27%,   NASDAQ  +0.32%

UK BANKS APPROVE FEWEST MORTGAGES IN SIX YEARS as Brexit nears. Seasonally-adjusted data from the UK Finance industry  “resonated” with banks approving a lean 35,200 mortgages last month, the smallest number since   April 2013. Overall consumer credit growth also decelerated only rising 3.8 percent in February   compared to an expected  4.5% increase. After a few years of “ ultra-easy monetary policy,” including negative interest rates and an unprecedented 2.6 trillion euro asset purchase program,   economic growth is weakening again. Inflation is below 2 percent and Germany’s 10-year bond yield has dropped back under zero, signaling a recession fear.   German consumer morale deteriorated heading into April,   suggesting that household spending might   weaken in the second quarter.  The UK 10-year Gilt  increased two basis points.  FTSE 100, +0.39%,  STOXX Europe 600 +0.76%,  CAC 40 +0.88%,  German DAX +0.62%.

TREASURY YIELDS STABILIZED following Friday’s bond market rally and inversion of the 3-month bill and 10-year note.  The   Federal Housing Authority is tightening lending standards   “flagging more loans as high risk”  concerned lenders are making loans that will default.  The average credit score of a homebuyer seeking a mortgage   significantly decreased  over the past seven years to 620 compared to 701 in 2011.  The   10-year U.S. Treasury note fell 4.3 basis point.    S&P  -0.07%,   Dow  +0.1%,   NASDAQ  -0.08%

EUROPEAN OFFICIALS STATED A  NO-DEAL BREXIT  IS LIKELY. “ We don’t want a no-deal Brexit, we’d much rather have the Withdrawal Agreement, but if it is a no deal, let’s do it quickly to avoid   larger collateral damage,” mentioned a European official. Exposed countries such as   Ireland and Belgium  are far from prepared for a no-deal Brexit.    The no deal-contingency measures include: EU financial aid program in Northern Ireland, ensuring basic air transportation is not affected and allowing a temporary measure to create a smooth transition in the central clearing of derivatives and depositories.  EU will   honor the entitlement to social security benefits accrued by EU citizens. “It would be a   material shock  for the EU if a no-deal Brexit occurs,” Brian Coulton,   Chief Economist at rating agency Fitch Ratings.  The UK 10-year Gilt   increased one basis point.  FTSE 100, -0.53%,  STOXX Europe 600 -0.49%,  CAC 40 -0.27%,  German DAX -0.22%. 

RISK-OFF SENTIMENT PREVAILED AS INVESTMENT-GRADE DEBT significantly outpaced junk bonds in net prices linked to actual trades.  Equities receded after the release of weak economic data, despite the 11.8 percent increase jump in existing home sales in February.  A cooling trend has emerged, “Homes aren’t flying off the market as they have been” Cheryl Young senior economist at Trulia.  The 10-year U.S. Treasury note plummeted 9.6 basis point.  S&P -1.90%, Dow -1.77%, NASDAQ -2.50%

RISK-OFF SENTIMENT PREVAILED AS INVESTMENT-GRADE DEBT significantly outpaced junk bonds in net prices linked to actual trades.  Equities receded after the release of weak economic data, despite the   11.8 percent increase jump in existing home   sales  in February.  A   cooling trend  has emerged,   “Homes aren’t flying off the market as they have been”  Cheryl Young senior economist at Trulia. The   10-year U.S. Treasury note plummeted 9.6 basis point.    S&P  -1.90%,   Dow  -1.77%,   NASDAQ  -2.50%