US: Corporate Credit Update: Risk Heats Up

Wires have reported over the last 24 hours that Speaker of the House Nancy Pelosi plans to make a state visit to Taiwan -- the first such visit in appr 25 years making China officials unhappy.

• Global Times Editor Hu Xijin tweets his opinion on what may happed:
• "The Chinese mainland has various plans to counteract Pelosi’s visit to Taiwan, and I believe what I have said is one of them. It is certain that the mainland’s response to Pelosi’s visit will be unprecedented and will involve shocking military response."
• "My suggestion to Chinese govt&military: If Pelosi visits Taiwan, PLA military aircraft will accompany Pelosi’s plane to enter the island, making a historic crossing of the island by military aircraft from mainland for the 1st time. Its significance would overwhelm Pelosi’s visit."
• Markets, if they have noticed the tweets are ignoring the posts at the moment.

BTP spreads finished sharply wider Wednesday, reversing earlier tightening as the fate of the Draghi gov't was set to be decided after market close.

• 10Y BTP/Bund spreads hit a high of 218.6bp (up 8+bp on the day) after falling to under 194bp at one point early as it appeared PM Draghi would stay on. The confidence vote is due around 1845CET.
• Bunds outperformed Gilts through the 5Y segment; but vice-versa further down.
• The ECB decision will take focus Thursday: markets pulled back 50bp hike pricing slightly as the events in Rome developed, but show about a 60/40% split between 25bp/50bp.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany:

• Germany: The 2-Yr yield is down 3bps at 0.607%, 5-Yr is down 0.4bps at 1.011%, 10-Yr is down 2bps at 1.257%, and 30-Yr is down 1.5bps at 1.454%.
• UK: The 2-Yr yield is up 2.8bps at 2.069%, 5-Yr is up 0.9bps at 1.916%, 10-Yr is down 4.1bps at 2.139%, and 30-Yr is down 2.7bps at 2.66%.
• Italian BTP spread up 8.3bps at 213.4bps / Spanish up 2.3bps at 122.7bps