MNI Credit Weekly: Beneath the Surface

25.04.11 MNI Credit Weekly.pdf

Executive Summary: 

• Spreads were +4bp on the week, but that fails to capture the story of huge intraweek volatility. Dispersion and credit selection is picking up after an indiscriminate move wider initially.
• Macro was dominated by the interaction between geopolitical and economic risks. The spike in Treasury yields may have expedited the swift reversal of reciprocal tariffs, while the USD remains pressured. All this raises uncertainty on the path of Fed cuts.
• Fund flows were very weak in credit, particularly HY. That was in stark contrast to both US and Europe govt inflows and firm US and China equity inflows.
• We had just €1bn of primary with Thursday being the only window for deals. Expectations are for more next week, but the outcome remains at the mercy of tariff developments, earnings season and the Easter holiday.