MNI EU Credit Weekly: Freaky Friday

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Executive Summary: 

• Spreads finished the week 1.6bp wider. China, cockroaches, and collateral were on investors’ minds in a
  rollercoaster week. It began with a risk-off move following escalation of US-China tensions, before
  conciliatory noises calmed markets. Regional bank exposure to another apparent fraud hot on the heels of
  First Brands and Tricolor led to fears regarding systemic credit exposure in the system.
• Macro saw some relief in France with the CAC40 up 3.7% and OATs -11bps. Global rates have had a firm
  week with Germany -6bps, UK -11bps and UST -2bps partly in response to caution in equities.
• Fund flows moderated in credit but with only USD HY turning to outflows. Strong US and China equity
  inflows did not extend to Europe.
• Supply was again mute. Aggregate NICs moved higher with just two negatives recorded, though average
  cover ratios were towards the high end of the recent range. Expectations are similar for next week.