US: Late Corporate Credit Update
Investment-grade corporate credit risk cooled Friday, back near October lows amid a cautious bounce in stocks as more hawkish (read: 75bp) year end rate hikes debated.
- Investment grade risk measured by Markit's CDXIG5 index is currently -4.398 at 94.703; CDXHY5 high yield index at 98.255 (+.857).
- Outperforming credit sectors (tighter or least wide): Technology and Industrials both +1.4 followed by Consumer Staples (+1.7).
- Lagging sectors (wider or least narrow): Subordinated Financials (+4.1), Materials (+3.6), Sr Financials (+3.5).
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US TSY OPTIONS: BLOCKS, Late 5Y Prints
- -29,000 FVX 109.25 calls, 27.5 at 1527:05ET ref 108-21.5
- 10,000 FVX 108.5 puts, 36 at 1513:58ET ref 108-25
US STOCKS: Late Equity Roundup: Hawkish Guidance, Late Session Volatility
Late session volatility - stock indexes were firmer after experiencing some post-FOMC swings: Hawkish forward guidance weighed on equities (initial selling sent SPX to 3836.75 low) and helped push 2YY to new 15 year highs of 4.1168%, yield curves extending inversion (2s10s -52.492 low).
- But flipside to hiking to is prospect of cutting rates as price stability and inflation comes back to 2.0% target helping current rebound with SPX tapping 3918.75 high. Round of selling on late question regarding economic pain and potential "difficult correction" to get housing fundamentals back in balance.
- Currently, SPX eminis trades -23.75 (-0.61%) at 3850.25; DJIA -210.28 (-0.68%) at 30509.19; Nasdaq -52 (-0.5%) at 11378.06.
- SPX leading/lagging sectors: Consumer Staples lead for the second day running (+0.79%) lead by food, beverage and tobacco shares, followed by Information Technology (+0.36%) while Industrials (+0.17%) scaled back earlier gains. Laggers: Consumer Services (-0.47%) weighed by telecom shares, followed by Materials (-0.38%) and Consumer Discretionary (-0.23%) with services underperforming.
- Dow Industrials Leaders/Laggers: Rebounding after heavy pressure Tue, Home Depot (HD) +3.37 to 277.54, Walmart (WMT) +3.08 at 136.63, Goldman Sachs (GS) +3.02 at 326.18. Laggers: United Health (UNH) -2.95 at 519.85, Caterpillar (CAT) -2.68 at 175.3, Visa (V) -2.57 at 189.5.
AUDUSD TECHS: Key Support Has Been Cleared
- RES 4: 0.7009 High Aug 26 and a key short-term resistance
- RES 3: 0.6956 High Aug 30
- RES 2: 0.6916 High Sep 13 and a key resistance
- RES 1: 0.6747/94 Hi Sep 20 / 20-day EMA /
- PRICE: 0.6664 @ 16:43 BST Sep 21
- SUP 1: 0.6647 0.764 proj of the Apr 5 - May 12 - Jun 3 price swing
- SUP 2: 0.6612 Low May 29
- SUP 3: 0.6568 Low May 27 2020
- SUP 4: 0.6538 Low May 26 2020
AUDUSD is trading lower and is once again below key support at 0.6682, Jul 14 low. A clear break of this level strengthens bearish conditions and confirms a resumption of the broader downtrend. Sights are on 0.6647 next, a Fibonacci projection ahead of 0.6612, the May 29 low. The Sep 13 high of 0.6916 marks a key short-term resistance. A break of this level is required to alter the picture.
