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Weekly Credit Strategy Update
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A continuous stream of negative news flow is hurting credit markets
Fri, Jun 27 2008, 15:38 GMT
by Danske Research Team
Weak sentiment continues with the iTraxx (Main) now once again trading north of 100bp. Consequently, activity in the primary market has dried out while liquidity in the secondary is poor. The bad news for monoline bond insurers continues with Fitch's decision to withdraw its ratings on MBIA and Ambac.
June is proving to be a bad month for the credit market with spreads drifting increasingly wider. A cocktail of inflation fears, more bad news from global housing markets and rising US unemployment has once again driven iTraxx Europe into 3-digit territory. Currently, iTraxx Europe trades at 106bp while iTraxx Crossover trades at 542bp. This corresponds to a weekly increase of 17bp and 54bp respectively. Moreover, liquidity in the secondary cash market has recently dried out, due perhaps to the forthcoming end of the quarter as well as the start of the summer. Over the summer itself we expect volatility to stay high and spreads to remain elevated.
Published on Fri, Jun 27 2008, 15:40 GMT
Archive
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Published On Fri, Sep 12 2008, 13:12 GMT - The change from ECB in its collateral framework took indices wider at the end of the week
Published On Fri, Sep 5 2008, 10:50 GMT
Danske Bank
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