MNI EU Credit Weekly: In The Driver’s Seat

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Executive Summary: In The Driver’s Seat

• Spreads finished the week 2.2 bps tighter. Rhetoric in US/China trade was dialled down and there were no fresh worries in the US financial sector. High beta consumer names had a particularly strong week.
• Macro themes included the US shutdown nearing record length with little progress. Softer CPI failed to sustain 10y yields <4%, while markets watch US-China talks, UK tax-hike risks and a possible Moody’s downgrade of France.
• Fund flows increased in IG led by EUR strength, while HY moderation continued on USD outflows. DM equities remained on firm inflows.
• Supply was broadly in line with recent weeks. The average NIC was lower at 0bp though cover ratios were also lower than recent weeks. Expectations are similar for next week.