MNI Credit Weekly: Trade War to Hot War

Download Full Report Here

Executive Summary: 

• Spreads were little changed on the week. Investors weighed recent developments in the Middle East, where escalating tensions have heightened inflationary risks. Nevertheless, many remain optimistic, citing the potential for regime change in a previously hostile nation as a catalyst for improved market prospects.
• In macro, STIR curves flattened this week due to rising inflationary risks from the Iran-Israel conflict. The Fed decision was also a factor, with hawkish comments from Chair Powell contrasting the initial dovish reaction to the dot plot.
• EUR IG fund flows were firm while mixed data pointed to USD IG outflows. US Equities reversed a month of weakness with a bumper $37bn inflow.
• Supply came to over €12bn. Aggregate NICs remain in positive territory with ongoing high levels of dispersion showing an impressive 28bp range. Surveys for total public syndication supply are skewed slightly lower for next week though expectations for FIG/Corps supply are slightly higher at ~€20bn.