Syz the moment

Source: Bloomberg

(note that it is as of December 31st, 2022 so it is lagging the actual net exposure) Source: Goldman Sachs

For the first time in 2023, the year-to-date performance of U.S. Treasuries has turned negative (-0.14%). Yesterday, the U.S. Treasury yield curve shifted upward by about 15 basis points as the index has lost 2.6% in February so far. This sharp reversal is due to a stronger than expected resilience in the U.S. economy, which could trigger further tightening of U.S. monetary policy. Source: Bloomberg

While sentiment is positive on Chinese assets due to hopes of the economic impact of the reopening, the inflows of CNY bonds lasted only one month. In January, capital outflows resumed due to fears of accelerating inflation in Asia and particularly in China as its economy reopens. It should be noted that the PBOC (People Bank of China) is one of the few central banks to maintain an accommodating monetary policy since the beginning of the COVID. Source: Bloomberg.

The rising cost of financing could be a headwind for companies, but investment grade (IG) companies appear to be "immune" for the next few years. Indeed, according to Bank of America, refinancing maturing debt at the current IG yield of 5.4% would reduce the coverage ratio to about 11.5x by the year 2026, which is still above the median. Source: Bank of America.

The People’s Bank of China offered 835 billion yuan ($121 billion) of cash via seven-day reverse repurchase contracts on Friday, resulting in an injection of 632 billion yuan on a net basis. That’s the largest one-day addition on record in data going back to 2004 - Sources: C.Barraud, Bloomberg

Source: Charlie Bilello

With 84% of companies reported, S&P 500 Q4 GAAP earnings are down 29% year-over-year, the 3rd straight quarter of negative YoY growth and the largest decline since Q2 2020. Source: Charlie Bilello