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Short-term US Treasury yields moved slightly higher while longer term yields were stable on Thursday. The preliminary reading for the S&P Global US Services PMI in March fell to 51.7 vs. the prior 52.3 and expected 52.0 reading. The Manufacturing PMI rose to 52.5 vs. the prior 52.2 reading and expectations of 51.8. Separately, the weekly initial jobless claims came in at 210k, below estimates of 213k. Credit markets saw US IG CDS spreads tighten 0.5p and HY spreads tighten 2.7bp. Looking at equity indices, S&P and Nasdaq rose 0.3% and 0.2% respectively.
European equity indices closed higher. European IG CDS spreads tightened 2.2bp and HY spreads were 2.5bp tighter. Asian equity markets have opened in the red today, dragged by the Shanghai Composite and Hang Seng Index. Asia ex-Japan IG CDS spreads were 3.6bp tighter.
These are bonds denominated in offshore Renminbi (CNH) and issued outside China (mostly in Hong Kong). The first dim sum bond was issued in 2007 by China Development Bank – a 2Y offshore RMB bond in Hong Kong, with a 3% coupon and size of RMB 5bn ($750mn). These instruments get their name from dim sum, a popular delicacy in Hong Kong. Dim sum bonds are typically issued by issuers that have a need for Renminbi but do not want to go through regulatory approvals as dim sum issuance are not subject to regulatory approval from mainland China or Hong Kong, provided that they are sold to professional investors.
On US Treasury key yield curve inversion being the longest on record
Jim Reid at Deutsche Bank
“An inverted yield curve should ultimately be a significant headwind for an economy, as capitalism works best when there is a positive return for taking more risk with lending and investments further out the curve”
On Dollar Up as Fed Starts to Look More Hawkish Than Some Peers
Helen Given, forex trader at Monex
“Powell’s comments look more hawkish than markets originally received them so the dollar’s reaping the benefits today.”
Win Thin, global head of markets strategy at Brown Brothers Harriman
“I think the market’s dovish take on the Fed is wrong and so see scope for the dollar to gain further”
On Germany Needing More Debt to Meet NATO Goal – Scholz’s Party
“As the SPD, we are committed to a fundamental reform of the debt rules… The debt brake prevents important investments in our future… Perhaps a joint approach with the opposition will allow for more pragmatism in the solution of problems”