That being said, this June has seen the least amount of sun since 1903 and equity returns are positively correlated to the amount of sunshine (according to this paper). If equities weaken, spreads will certainly widen.
While I usually don't delve into outright equity predictions more than once a posting, I thought this story about insider buying drying up was interesting.
Yesterday, everyone was worried about the World Bank's economic prediction of further weakness. Well, today's response to that is the OECD which is predicting the worst is over.
LIBOR rates yesterday hit all time lows.
The negative basis continues it's narrowing rally largely unabated (despite my predictions of a pause). However, I was a bit disappointed to see that credit curves actually inverted another 4bps over the last week which is in contrast to the trend of the last 6 weeks.
Thankfully, new issue supply is light; down about 30% from the '09 monthly average. Historically, June is above average for new issue volume as issuers try to get deals done before the July 4th holiday and then earnings season blackout period.
Secondary volumes remain healthy however the dealer sell vs dealer buy ratio has crept down towards 2x from it's usual 3x. Backing this data up anecdotally, I'm hearing a few folks saying that dealer inventories feel a bit heavy as customer buying has slowed a bit.
No comments:
Post a Comment