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Bond Market News
Treasury Yields Inch Higher, Equity Markets Drop
March 4, 2026
US Treasury yields continued to move higher, rising by 2-3bp across the curve. Regarding the impact of the Middle East tensions, New York Fed President John Williams noted that the impact on financial markets was so far “reasonably muted”. Minneapolis Fed President Neel Kashkari said that it was “too soon to know what imprint this has on inflation and for how long”. Kansas Fed President Jeffrey Schmidt said that “inflation has been above the Fed’s objective for nearly five years”, and that the central bank does not have the room to be complacent. Markets await the ISM Services PMI reading later today with expectations for a 53.5 print, continuing the expansion in the sector. ADP Payrolls is expected to improve to 50k in February from the prior 22k reading.
Looking at US equity markets, the S&P and Nasdaq ended lower by approximately 1% each. US IG CDS spreads widened by 1bp and HY CDS spreads were 6.4bp wider. European equity indices ended sharply lower with the Euro Stoxx 50 down by 3.6%, the FTSE 100 down by 2.8%, the DAX and CAC lower by 3.4%. Analysts noted that the intensifying conflict in the Middle East has cast doubt over the inflation and monetary policy outlook in the region. The iTraxx Main CDS spreads were 2bp wider and the Crossover CDS spreads were 10.4bp wider. Asian equity markets have opened in the red this morning. Asia ex-Japan CDS spreads widened by 2.3bp.
New Bond Issues
HDB raised S$925mn via a 7Y bond at a yield of 2.073%. The senior unsecured note is unrated. The deal was upsized to S$925mn from S$800mn. Proceeds will be used to finance the development programme of HDB, its working capital requirements and to refinance existing borrowings.
New Bonds Pipeline
- NBN A$ 10Y and/or 15Y sustainability bond
Rating Changes
- Fitch Upgrades Pampa to ‘B’; Outlook Positive
- Alcoa Corp. Upgraded To ‘BB+’ On Supportive Financial Policy And Resilient Operational Performance; Outlook Stable
- Moody’s Ratings upgrades Jyske Bank A/S’s long-term deposit ratings to A1 and affirms the long-term senior unsecured rating at A2
- Fitch Downgrades INEOS Quattro to ‘B’; Outlook Negative
- Trinseo PLC Downgraded To ‘SD’ On Deferred Interest Payment
- SoftBank Group Corp. Outlook Revised To Negative On Additional Investment In OpenAI; ‘BB+’ Ratings Affirmed
Term of the Day: Backwardation
Backwardation occurs when the current spot price of crude oil is higher than futures prices for later dates. This creates a downward-sloping market curve, implying tight suppy dynamics due to immediate shortages, geopolitical tensions, or strong current demand. This causes spot physical oil to be more valuable than in the future.
The current crude oil curve is downward sloping or in a backwardation due to the Middle East tensions where the Strait of Hormuz has been shut amongst other developments, causing a shortage of supply.
Talking Heads
On Bond Traders Curbing Rate Cut Bets amid Inflation Worries
Brij Khurana, Wellington Management
“Inflation is still above target. So the market’s going to have to potentially reprice more or take out more Fed cuts than they were thinking last week”
Molly Brooks, TD Securities
“The flattener can be attributed to Fed expectations of less easing, which goes hand in hand with higher inflation expectations coming from the spike from oil”
On Investors Making a Dash for Cash
Michael Arone, State Street Investment Management
“Oil, and the dollar, are the only two things that people want to own right now”
David Kelly, JP Morgan Asset Management
“There’s an interesting flight to quality happening, with the dollar rallying, but it’s not going to Treasuries or other dollar assets”
On UBS Call on 15% Private Debt Default ‘Absolutely Wrong’ – Ares CEO
“It was actually irresponsible… is part of the problem when you have someone who’s actually never been in a segment of the market making commentaries… if you’re there, everything else in your portfolio, I assure you, is going to be completely torched”
Top Gainers and Losers- 04-Mar-26*
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