This site uses cookies to provide you with a great user experience. By using BondbloX, you accept our use of cookies.
US Treasury yields were stable across the curve. US consumers’ near-term inflation expectations dropped in November to its lowest level since April 2021. Median 1Y inflation expectations declined for a second month to 3.4%, down from 3.6% in October. Expectations for the inflation outlook over the 3Y and 5Y horizon held steady at 3% and 2.7%, respectively. US credit markets saw IG CDS spreads tighten by 0.1bp and HY by 1.4bp. US equity markets ended higher with the S&P and Nasdaq up 0.4% and 0.2% respectively.
European equity markets ended higher too. In credit markets, European main CDS spreads were flat and crossover spreads widened by 0.6bp. Asian equity markets have opened slightly higher today. Asia ex-Japan IG CDS spreads were wider by 0.6bp.
Subordinated bonds refer to bonds that rank below senior debts on the capital structure. In the event of liquidation, holders of subordinated debt would only be paid after all the senior debt is repaid. Thus, the ratings and yield of subordinated debt tend to be lower and higher respectively, to account for the greater risk associated with subordinated vs. senior debt.
There are different kinds of subordinated debt that can include perpetuals/AT1 CoCos, payment-in-kind notes, mezzanine debt, convertible bonds, vendor notes etc. Subordinated debt rank higher to preferred equity and common equity in the capital structure.
On projecting two Fed rate cuts next year with first in Q3 – Goldman Sachs
“Healthy growth and labor market data suggest that insurance cuts are not imminent… But the better inflation news does suggest that normalization cuts could come a bit earlier… Our own inflation forecast is a touch lower, but FOMC participants will likely still prefer to err on the side of being less optimistic”
On Rate Cut Pivot Can’t Come Soon Enough for Debt-Strapped Companies
Ellen Zentner, chief US economist at Morgan Stanley
“2024 is a transition year—it’s a turning point for the economy, it’s a turning point for monetary policy”
Curtis Dubay, chief economist at the US Chamber of Commerce
“Any business that has a loan they took out pre-2022 is now going to be facing higher refinancing rates… There’s a lot of financial tightening occurring”
Jim Reid, Deutsche Bank
“The maturity of the high-yield market is the shortest it’s ever been in my career”
Garcia Herrero, chief APAC economist at Natixis
“The cuts are going to come. Inflation is coming down rapidly”
On economic fragmentation could cut global GDP by 7% – IMF First Deputy MD Gita Gopinath
“While there are no signs of broad-based retreat from globalization, fault lines are emerging as geoeconomic fragmentation is increasingly a reality. If fragmentation deepens, we could find ourselves in a new Cold War”