This site uses cookies to provide you with a great user experience. By using BondbloX, you accept our use of cookies.
US Treasury yields dropped across the curve, with the 2Y down 10bp to 4.55% and the 10Y down 8bp to 4.20%. This move lower in yields came after the softer than expected ISM Manufacturing print. The ISM Manufacturing Index came at 47.8 in February, lower than expectations of 49.5 and January’s 49.1. There was a dip across most components of the index – the Price Paid Index fell to 52.5 vs. expectations of 53.0; the New Orders Index contracted to 49.2 vs. expectations of 52.7 and; the Employment Index fell to 45.9. Also, the University of Michigan consumer sentiment index saw its first drop in three months to 76.9 in February. Looking at credit markets, US IG CDS spreads tightened 1.5bp and HY CDS spreads were 5bp tighter. Equity markets closed much higher with the S&P and Nasdaq up 1.3% and 2.1% respectively.
European equity markets ended higher. Credit markets in the region saw the European main CDS spreads tighten 0.7bp and crossover spreads tighten by 3.2bp. Asian equity markets have opened in the green today. Asia ex-Japan IG CDS spreads were 2.4bp tighter. Separately, Chinese banks have approve $28bn in loans for the troubled property market with about 6,000 projects included in the white lists. This comes after new home sales from the 100 biggest developer slid 60% YoY in February.
A first lien bond is a bond with a lien that is senior to its subordinated bonds. A lien is a legal right where a creditor can claim a security interest or seize control of an asset provided by the asset’s owner. It gives a type of legal guarantee to the lender for obligations like loans or debt repayments. Bonds typically can be either first lien, which consist of senior secured debt, or second lien, which consists of junior or subordinated debt that rank below first lien debt in the capital structure. A bondholder of a ‘first lien bond’ gets repaid before all other liens’ holders in the event of a default. Second lien holders get repaid only after the first lien holders get paid back.
On Bond Bears Grumbling, Pimco to DWS Gearing Up to Buy the Dip
Michael Cudzil, PM at PIMCO
“We are very much closer to adding back duration and getting overweight duration relative to our benchmarks”
Steve Bartolini, PM at T. Rowe Price
“If Powell says something to the effect that rate cuts will come in the second half of the year, then that can catalyze a move to pricing in two cuts”
George Catrambone, head of fixed income at DWS
Treasury market is “more fairly valued the further you go out on the curve… closer to the Fed’s policy outlook for this year”
On Emerging Assets at Risk as Governments Clash With Central Banks
Rajeev De Mello, a global macro portfolio manager at Gama Asset
“I prefer to invest in bonds and currencies of those countries that pro-actively addressed inflationary upticks, and have been reticent towards markets where central banks are encumbered by political interference.”
On Latest on Wall Street to Boost S&P 500 Target – BofA’s Savita Subramanian
“Bull markets end with euphoria — we’re not there yet… Sentiment has improved, but areas of euphoria are limited.”