Daily Commentary

Once again, a combination of wider swap spreads and weaker global equities are pushing our spreads wider. Fortunately supply remains light and technical demand remains strong so the damage should be limited. Financials are the underperformers as they are the most relatively liquid sector and therefore are first bonds folks try to sell (because they can).

The ratings agency continue to play catch-up or look backwards. Today's mid-game rule change involves bank hybrids which may lead to the downgrade of ~75% of that sub-sector by Moody's. Insurance hybrids are down on the day in the fear that they may be next.

Morgan Stanley will be re-structuring it's market leading prime brokerage group to assuage the fears of those that watched some of Lehman's PB assets get claimed in bankruptcy.

Secondary volume was heavy yesterday with the dealer sell vs. buy ratio heading back towards it's usual 3x. Recent new issues from DT and CMCSA are wider from where they priced while the TITIM issue remains firm.

Bloomberg news has a story about the recent insurance spread rally that I've mentioned before.

Once again, George Soros feels the need to get himself in the news....this time is 'how to reform'.