Halister News

(Bloomberg) -- Going into a data-packed week -- euro-area, U.K., China manufacturing PMIs, U.S. NFP, U.S. primaries Super Tuesday -- and after a G-20 meeting that underwhelmed many, credit markets are trading with a weaker bias this morning. Much now also seems to rest on the hope that ECB will inject further stimulus into the financial repression equation at its March 10 meeting, Bloomberg strategist Simon Ballard writes.

• Paradoxically, it’s possible that haven flows driving German yield curve negative out to 9yrs could actually enhance (selective) incremental yield appeal of corporate paper

STATE OF PLAY (Monday 10.30am GMT)

• Synthetic indexes straddling unchanged as equities trade lower and capital flows into haven assets; iTraxx Europe 104.26 mid (-1.1bps), iTraxx X-over 428.11 mid (+2.4bps)
  • Financials bucking the trend somewhat as spreads continue to grind tighter; capital structure curve flatter again with iTraxx Senior and Sub indexes -1.8bps and -7.3bps respectively
• Cash indexes outperforming synthetics, reflecting buy-and- hold nature of the asset class and demand for yield in negative rate environment; EUR IG currently 97.30 (-0.6bps), EUR HY cash quoted 562.68bps (-3.4bp)
  • GBP IG credit, now 209.50 (+0.4bps), remains under pressure from Brexit risk, although GBP HY just off early Monday wides (588.96), currently seen at 588.90 (+2.4bps), according to Bloomberg data
• Bloomberg Commodity Index little changed vs. Friday close ($75.49, +0.02%); WTI current $32.68, (-0.3%), copper March 2016 future (212.70) +0.1%, silver March 2016 future +0.9% and gold +1.2%
• European equities back in the red as G-20 meeting fails to assuage global macro concerns; major bourses down by 0.6%-1.6% on average
  • Similar moves being seen in U.S. equity futures, suggesting a likely weaker bias to U.S. CDX credit mkt indexes at the open
• Weaker tone to risk assets fueling haven flows into EUR government bonds, taking yields negative out to 9yrs now
  • 5Y bund -0.40% (-3bps), 9Y -0.01% (-4bps), 10Y 0.11% (-4bps), 30Y 0.81% (-4bps)

• NOTE: Simon Ballard is a credit strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.

• NOTE: The CREDIT SNAPSHOT will not be published tomorrow; it will resume Wednesday