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5 Jun 2013
Flash: Fixed income assets come under pressure – Deutsche Bank
FXstreet.com (Barcelona) - Fixed income asset classes continue to come under pressure across EM and DM, with fairly notable intra-day volumes in some areas, as investors fret over the Fed's potential path of asset purchases.
Following yesterday's moves, 10yr yields in USTs, bunds and gilts are +52bp, +37bp and +41bp off their recent lows respectively. Similarly, major DM credit indices have pulled back from the cyclical tights seen last month including US CDX IG (+13bp off the tights), European iTraxx (+17bp) and Australian iTraxx (+18bp). Interestingly US CDX IG traded between -2bp and +5bp yesterday, a range wider than any seen for a few months. There is clearly nervousness around the Fed.
Away from Developed markets, our Emerging Markets team write that the technical condition for the sovereign credit market has deteriorated throughout May and continues to be very poor. “Given the deterioration in perception of EM's relative fundamentals - especially versus the US - the current weakness could well be just the beginning of a 'great unwind' of the extraordinary strength in the technicals seen in EM credit during most of the past two years.” notes the Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank.
Following yesterday's moves, 10yr yields in USTs, bunds and gilts are +52bp, +37bp and +41bp off their recent lows respectively. Similarly, major DM credit indices have pulled back from the cyclical tights seen last month including US CDX IG (+13bp off the tights), European iTraxx (+17bp) and Australian iTraxx (+18bp). Interestingly US CDX IG traded between -2bp and +5bp yesterday, a range wider than any seen for a few months. There is clearly nervousness around the Fed.
Away from Developed markets, our Emerging Markets team write that the technical condition for the sovereign credit market has deteriorated throughout May and continues to be very poor. “Given the deterioration in perception of EM's relative fundamentals - especially versus the US - the current weakness could well be just the beginning of a 'great unwind' of the extraordinary strength in the technicals seen in EM credit during most of the past two years.” notes the Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank.