Tuesday, April 14, 2009

Intraday Credit Commentary

IG credit is edging back wider today so far, as it seems the wave of protection sellers that caused us to gap tighter yesterday afternoon (albeit with a small recovery at the close) have flipped. This reinforces our view of a growing trend towards swing or channel trading in IG12 as there appeared plenty of interest in buying protection this morning. IG12 is about 6-7bps wider from its open and 5bps wide of last night's close. Financials are mixed with the monolines all wider (hurt modestly by Moody's downgrade of ABK) while banks are tightening still (following the equity trend recently) as technicals squeeze arbs across and within the capital structure. Financials are underperforming non-financials with Energy names improving the most so far while Consumer and Industrial names are mixed to modestly tighter. ABX and CMBX prices are flat (unch) near their lowest levels as builders are generally tighter. Higher beta insurers are improving a little today but remain near their wides. AIG and ILFC are weaker and the Transports are underperforming today.

Sentiment is becoming tougher to discern as major drivers of credit strength at the index or single-name levels is being driven by index-arbitrage (pulling index values in line with fair-values) rather than sentiment in one or the other.

[TD translation: fundamentals? we don't need no steenkin' fundamentals.]

commentary compliments of creditresearch.com Sphere: Related Content
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Michael Comeau said...

Let's just hope that INTC doesn't lay an egg tonight with its guidance - tough to gauge after STX' mess.

Negative reaction to GS isn't a good sign for near-term market performance - I actually thought the offering was a good idea. Replacing TARP money with fresh capital is a good idea.

Anonymous said...

Thanks TD