Daily Commentary

With AIG making money and unemployment easing, all seems well in the world of credit investing.  Spreads are tighter on the day and given the beautiful weather on the east coast, I suspect many of those investors will soon be leaving the office headed to their summer homes.  There are no noteworthy new issues in the queue today. 

The data showing the incredible demand for credit continues.  The natural demand picture, according to JPMorgan, for July showed ~$67B in coupons and maturities paid versus only ~$24B in new issuance.  Also, the recent mutual fund flow data has inflows into credit funds accelerating at a pace ~20% above the YTD average.  

Perhaps yesterday's kerfuffle over AIG risk was not about the tenuous link to Radian's earnings but good old fashioned frontrunning or an earnings leak.  After today's actual earnings report, AIG bonds are up another $2 (on top of yesterday's $5).  

Morgan Stanley paid back their TARP money...or more accurately repurchased their own warrants back from the government.  I found it interesting that they drove a better deal than Goldman (as noted here).

As I noted earlier this year, CSFB bankers were "livid" about receiving their bonuses in the form of their own bonds/deals that they created.  Apparently, they aren't so livid anymore as these bonds are doing very very well (story here).  

For those government conspiracy theory fans, here's a interesting blog post about the US Treasury issuing bonds at auction and then buying almost half of those same bonds back within the week.  

While I am clearly not a technical analyst or chartist, I'd be curious to hear if the techies agree with this layman's opinion that the Vix is forming a base by not setting new lows.  Given that it's opened lower, perhaps this requires further review.