US: Corporate Credit Update: Risk Back to Early May Lvls
May-27 16:05
Investment-grade corporate credit risk has receded back to early May levels as stocks extend highs, SPX nearly gaining 5% for the week. SPX emini futures currently +75.25 (+1.86%) at 4131.25, Dow Industrials +363.01 (1.11%) at 33000.4, Nasdaq +313.3 (+2.7%) at 12053.98.
- Investment grade risk measured by Markit's CDXIG5 index at 78.55 (-2.868); CDXHY5 high yield index at 101.799 (+0.3).
- Outperforming credit sectors (tighter or least wide): In-line w/ improved prices for tech and semiconductor share, Technology (-2.7) and Communications (-2.2) followed by Financials: subordinated (-2.1)
- Lagging sectors (wider or least narrow): Industrials (-1.2), Consumer Discretionary (-3.1) and Materials (-1.5)
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CANADA: BAX Futures Slowly Catching Up With GoCs
Apr-27 16:05
- BAX futures are slowly catching up with the sell-off in GoCs, with March red implied yields up 2bps (having been -7bps early in the session) vs the +5.5bps for 2Y GoCs.
- It does little to change the material flattening in the curve seen since Friday though, with a terminal rate less than 10bps higher than immediately after the BoC decision to hike 50bps on Apr 13.
- Subsequent CPI inflation strength and consideration of a 50bp hike in June has seen the path remain more front-loaded.
- Having edged higher over the past week, the 3M FRA-OIS has tentatively levelled off at 33.5bps, below the recent peak of 37bps from early March at the height of Russian invasion uncertainty.
US TSYS/SUPPLY: Preview $49B 5Y Note Auction
Apr-27 16:02
$49B 5Y-Note auction (91282CEN7) at the top of the hour, WI currently running around 2.787%, 24.4bp cheaper to last month's stop.
- March auction review:
- Tsy futures gained after $51B 5Y note auction (91282CEF4) stopped through: 2.543% high yield vs. 2.553% WI; 2.53x bid-to-cover vs. 2.46x 5 month avg.
- Indirect take-up: slipped to 60.2% vs. 67.8% in Feb; Primary dealer take-up: climbed to 20.1% vs. 13.8%; Direct take-up 19.7% vs. 18.4%.
- Timing: The 5Y note results will available shortly after the competitive auctions closes at 1300ET.
US: Commerce Sec Raimondo Signals Support For 'Big Tech' Bill
Apr-27 15:58
Commerce Secretary Gina Raimondo has delivered testimony to the Senate Commerce, Science, and Technology Committee on tech policy, supply chains and superconductor shortages.
- Raimondo: 'With respect to chips I don't think its an exaggeration to say this is a national emergency and it is affecting our national security.'
- Raimondo described the chip 'bottleneck': 'Average consuming industry actors have a maximum superconductor inventory of five days.'
- Raimondo also said that chip investment was critical to the Ukraine war: 'There are 250 chips in every javelin missile system.'
- In response to a question from Senator Amy Klobuchar (D-MT) on the American Innovation and Choice Online Act, Raimondo: 'The department and I certainly support that and concur with the aim of the legislation and the views expressed in that views letter.'
- The remarks from Raimondo remarks represent a significant support from the administration on antitrust legislation that will target big tech.
- The hearing can be viewed in full here: https://www.commerce.senate.gov/2022/4/commerce-co...
