Monthly Archives: April 2013

Credit update April 29, 2013

It was a sleepy week but buying has continued to trump sellers, as markets continue to grind tighter. The majority of earnings that have come in thus far have been lackluster to weak. The same can be said for GDP numbers that reflected a drop in government spending. Given these numbers, what continues to hold up the market is QE that has the potential to continue and even lengthen as evidenced by recent comments. So, once again, the recipe in the blender is weak but consistent growth, (still) great balance sheets, low default rates, lots of cash looking for homes, and most importantly, QE to put a guaranteed floor on rates. The reflation of the credit market is thus alive and well.

 

In investment-grade, interest has been centered more on the intermediate part of the curve.

 

Fund flows have been overall been of an inflow nature, mostly ETF-related.

 

Names in play last week included: VZ, VOD, JCP, Sprint, DISH.

 

Spreads:

investment grade +78.5 bps over swaps

High yield .. close to $105.75 in dollar price.. 6.25% yield to maturity.

Emerging market +112 bps over swaps

Gold — headed for the basement?

Gold — destined for the basement or not?

Gold has taken a fresh set of pounding, especially as its fundamental value should take new meaning (and that too, upwards!) as every central bank is intent on QE-type policies and diminishing the value of paper money. Rumor has it that commercial banks have put on a “sell gold, buy bonds/stocks” and this pressures weaker hands to fall in line. What do you think?