Syz the moment

Two European banks on Tuesday sold the first publicly-syndicated AT1 bonds on the continent since the Credit Suisse’s crisis.
Easing concerns about the health of the banking sector and hopes that major central banks are nearing the end of their tightening cycles contribute to the move. Source: Bloomberg

🌍 Absolute yields in the global credit market present compelling long-term entry points, especially for high-quality European corporate bonds. Compared to the US market, the attractiveness of EUR Investment Grade (IG) credit is soaring. While concerns about a deeper recession in Europe have caused some turbulence, they have also opened up intriguing investment opportunities. Moreover, the recent Credit Suisse incident has further contributed to the dynamic landscape. 📊🔍 Is it time to seize the potential yield offered by EUR IG bonds? 💡💰 Source : Bloomberg

A gauge of leveraged activity in China’s money market has notched another record as onshore financial institutions take advantage of ample liquidity to boost borrowing.

Turnover of so-called overnight pledged repo trades surged to an all-time high 7.9 trillion yuan ($1.1 billion) on Tuesday.

An increase in volume may be indicative of banks using cheap funding costs to buy bonds, even if the transactions also include the day-to-day financing needs of firms in the market.

Source: Bloomberg

The latest European Commission survey on Eurozone selling price expectations shows a significant decline, suggesting that inflation should continue to decrease in the coming months, alleviating pressure on the ECB to tighten its monetary policy. After a possible one or two final tightening moves by the ECB in June and/or July, is it worth considering a higher allocation to European rates, particularly core bonds? Source : Bloomberg.

The iTraxx Main index, which monitors the 5-year credit default swaps (CDS) of IG corporate bonds, achieved a significant breakthrough by crossing the 80 bps threshold for the first time since the banking stress experienced in March. This development indicates a positive shift in market sentiment and improved confidence in the IG corporate sector. This achievement in the credit market raises an important question: Is the market too complacent with the current situation, or does it suggest that a soft landing has become the baseline scenario? Source: Bloomberg

Market sentiment initially turned negative as the first-round results showed an unexpected rise in Erdogan's prospects for securing another presidential term. However, in a remarkable turnaround, Turkey's 5-year CDS has already returned to pre-election levels just days after Erdogan's re-election. The appointment of Mehmet Simsek as Minister of Treasury and Finance signals a positive shift towards a more conventional economic approach, bolstering market confidence post-election. Could this indicate a forthcoming adoption of a more conventional monetary policy strategy by the Turkish Central Bank? Source : Bloomberg

The UK bond market witnessed a substantial downturn due to an unexpected surge in Britain's core inflation rate, reaching its highest level in over three decades. This surprising release led to a sharp 25bps rise in the two-year UK Treasury yield. Consequently, market sentiment has shifted, with rate hike expectations now fully priced in for June, and projections even suggesting a potential 50bps increase. As a result, the terminal rate, anticipated for December 2023, is now hovering at almost 5.5%, a significant shift from less than 5% merely two days ago. Source: Bloomberg.

The rate is down more than 110 basis points since last year’s high, taking down the spread to Italy bonds to -40bps.

Prime Minister Kyriakos Mitsotakis’s center-right New Democracy received almost 41% of the vote vs 20% for the leftist Syriza party. Mitsotakis could maybe secure a single-party government in about a month.

Will Greece be back in Investment Grade party?

Source: Bloomberg