Main is 1.5 tighter so far, XOVER is 7 tighter. SOVX seems about unchanged, but it also seems to be a product on the verge of death. Volumes seem abysmal and the liquidity matches that.
HYG and JNK have attracted over $500 million of new money this year. Yet they are down. The premium to NAV has been reduced and HY17 actually is trading rich.
With the market having a decent tone the premium to NAV of HY17 and JNK seems sustainable. HYG is likely to continue to underperform.
Investment grade was weak yesterday and underperformed treasuries (spreads widened). Nothing really changing on our view here.
MUB and BABS actually both did very well yesterday (finally) and BABS still seems cheap (if small).
Guess we can all sit and wait now for the payroll data. The revisions could be interesting. Away from that, we seem to have gotten back into last year’s pattern. Weakness in markets when facing the reality of how European Sovereign debt is still sloppy at best, and many of the banks are a mess, then a run higher based on some government or central bank rumor.
The headlines out of Europe have generally been bad. Away from ADP the data has been okay, but not strong enough to justify prices with what is going on in Europe. It seems like money is slowly getting sucked into the market as we have had the Santa Rally, the New Year Rally, and the Mortgage Rally. Italian 10 year yields are well above 7% and Spanish 10 year is at 5.65% which isn’t horrible, but it is 60 bps higher than where it started the year. Greece seems to be coming to a head, and the fact that the EU is delaying bailout distributions could push it to a conclusion even sooner.