Coming week in credit markets – July 31, 2012

We saw markets soar last week as the ECB indicated vigorous action, with Fed-like actions to support debt instruments. This was the kind of rhetoric the market was looking forward, to put a floor on the beta exposure. Stocks soared and are within spitting distance of their YTD highs. Credit markets also did quite well; IG18 representing the investment-grade markets shed some 6 bps to end up at 104. High Yield did even better and gained almost one point to end up at 97 (price level). This lends credence to our repeated assertions that macro news has been the main driver of the market. Corporate earnings have generally been on the softer side, although this indicates good fiscal management given that revenues are the main culprit. However, with cash hoards in the trillions across corporate America, it is safe to say that corporations are sanguine about medium term to long term prospects and are waiting for catalysts that will convince them to get into CAPEX mode from cash mode.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: