MNI EU Credit Weekly: Tis the Season

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Executive Summary: 

• Spreads tightened 4.5bp this week with the often-cited “Santa Claus rally” seemingly under way. With supply set to tail off sharply, technicals should remain supportive despite valuations at the tights.
• Macro saw pressure on global rates generally, due to growing speculation of hikes from the BoJ. Gilts proved the exception following the UK budget.
• Fund flows showed ongoing moderate inflows into IG. USD HY showed strength even in face of equity inflows moderating.
• Supply eased this week with expectations for a sharp drop-off next week. Aggregate NICs were high on the back of some interesting deals from WPP, Manpower Group and DXC Technology.