US Markets ended the week in positive territory with the S&P up 1.1% creating another record and Nasdaq up 1%, just shy of its record high. Sectors across reversed to end in the green. Financials, up 2.9% led the gains followed by Energy and Materials up 2%. US 10Y Treasury yields rose 4bp to 1.36%. The earnings season kicks-off with JPMorgan Chase and Goldman Sachs set to report on Tuesday, BofA, Citigroup and Wells Fargo on Wednesday and Morgan Stanley on Thursday. Banking Q2 results are expected to be weaker – revenues could be down ~28% and loans could see a drop of 3% as per Bloomberg. Overall earnings for the S&P 500 are expected to be up a sharp 65%, compared to a year ago. European markets surged higher shrugging the previous day’s sell-off – CAC, DAX and FTSE were up 2.1%, 1.7% and 1.3% respectively. Mining was up 4% leading the gains. US IG and HY CDS spreads tightened 1bp and 5.9bp respectively. EU main and crossover CDS tightened 1bp and 4.6bp respectively. Saudi TASI was down 1.3% while Abu Dhabi’s ADX was up 0.4%. The People’s Bank of China is set to cut the reserve requirement ratio (RRR) for banks by 50bp from July 15 to inject more liquidity. Asian markets have taken a cue from the US markets and have opened in green – Nikkei reversed Friday’s losses and is up 2.2%, Shanghai, HSI and Singapore’s STI were up 0.9%. 0.7% and 0.3% respectively. Asia ex-Japan CDS spreads were 0.3bp wider.
MUFG $ 4NC3/6NC5/11NC10 at T+75bp/T+95bp/T+115bp areas
Korea Investment & Securities $ 3Y/5Y at T+140ap/T+165bp areas
Yuyao Shuncai Investment 364-day $ notes at 2.9% area
Zhejiang Provincial Energy hires for $ bonds
The Credit Impulse Indicator is a metric used to measure the growth in new credit issuances as a percentage of GDP. Particularly in China, this metric is often watched indicator of the government’s economic policy stance – it rises when the government adopts a pro-growth policy stance and falls when it moves to cut back on stimulus measures, as per NikkeiAsia. NikkeiAsia reports that the credit impulse index peaked in November 2020 at 32% and has fallen to 25% in May, the lowest since February 2020.
On bond contrarians vindicated by US Treasury yield plungeStephen Liberatore, lead portfolio manager of fixed income strategies at Nuveen