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Weekly Credit Strategy Update
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Equity markets have seen significant volatility
Fri, Jul 18 2008, 12:21 GMT
by Danske Research Team
A busy week in terms of newsflow is coming to an end. Credit spreads have remained more or less stable compared to last week but equity markets have seen significant volatility. The US treasury stated that it will support Fannie Mae and Freddie Mac. Q2 reports from large US banks are a mixed bag. In the Nordic region, Q2 reports from the large Nordic banks continue to surprise on the positive side.
The week has been busy in terms of market-moving news and was kicked off when US treasury secretary, Henry Paulson, gave very explicit public backing to mortgage giants Fannie Mae and Freddie Mac. While equity markets have been extremely volatile – especially bank stocks - credit markets have been characterised by a far more stable development compared to earlier this year. Currently iTraxx Europe is trading at 101bp and iTraxx Crossover at 539bp, which for both indices is 3bp tighter than last week. We believe that the more stable credit market relative to the equity market is the realisation that lawmakers are willing to put out the safety net under the systemically important institutions. This is likely to benefit bondholders whereas shareholders could still get hurt.
Published on Fri, Jul 18 2008, 12:25 GMT
Archive
- The crisis seems to be affecting Europe on a larger scale
Published On Fri, Oct 3 2008, 12:48 GMT - During the week money market distress reached new heights
Published On Fri, Sep 26 2008, 13:07 GMT - The most dramatic week ever in the credit market
Published On Fri, Sep 19 2008, 13:35 GMT - Fannie Mae and Freddie Mac taken over by the US Treasury
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
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