Credit Markets – Looking Under The Hood
Yesterday was a busy day in the markets. The new issue market was very busy, 9 issuers came bringing a total of $10.5 billion. GECC was the biggest deal with $3 billion in total. I think the Time Warner bonds were the most interesting as it was $1 billion in total and the largest non […]
Rounding Error, Short Squeeze, and Cost of Recap
Job report definitely better than expected, but if 50k comes from the striking Verizon employees coming back to work it is less impressive. Underemployment continues to be weak. It also seems strange that strength in hiring came in services; whereas, employment in the ISM Services report was weak. Anyways, not a bad report, but nothing […]
Curve Flattening In Credit – Never a Good Sign
The credit markets here are actually deteriorating and are showing signs that there is growing default concern, rather than just pressure to reduce risk. The red line is the ratio of BAC 5yr CDS vs 3yr CDS. It was the first curve to flatten. The dark blue line is the European XOVER index. As European […]
The Lehman “Moment”
Lately it is hard to avoid talk about the Lehman “Moment”. It almost makes you think that the world fell apart the weekend Lehman filed for bankruptcy protection. But that’s not the case at all. Stocks sold off that first day, bounced the second, had another sell off, but by the Thursday, they actually closed […]
Reaching For Yield And Clubbing Baby Seals
With Greece “solved” and economic data topping expectations, we are back in full risk on mode. Once again the quest for yield is on every fixed income investor’s mind. “Reaching for yield” is a term used when investors make an investment based on wanting more current income. It may be a subtle difference, but the […]