MNI EU Credit Weekly: Warsh and Peace

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Executive Summary: Warsh and Peace

• Cash spreads were marginally weaker despite a rally in CDS indices. Autos drove Consumer Discretionary wider following BMW’s profit warning.
• In macro, government bonds closed the week on a soft tone as commitment to Middle East peace was questioned and Fed Governor Warsh set a marginally hawkish tone. Nevertheless, Brent Oil closed below $80. Itraxx XO and Main were -4.5bps and -0.7bps respectively.
• Fund flows accelerated for credit while US equities had a record-breaking inflow.
• EUR IG supply was broad flat at just under €17bn. Aggregate NICs ground tighter with the lowest average in over a month.