During last week synthetic credit indices moved a few basis points higher each session and iTraxx Main (5y) ended 17bp higher w/w. Yesterday was another tough session with a further increase in volatility as virtually all markets were in the red and with larger movements than in recent days.
Newsflow is almost exclusively negative at the moment and the old risk on/risk off trading pattern is back. We think volatility will continue to be high as concerns around China's rebalancing, the phase of the US business cycle and the effects of negative rates remain.
Primary markets were still predominantly on hold last week, though we did see the first Nordic high-yield issue of the year.
The largest Scandi banks have now reported year-end figures and we have still not seen any major direct effects of the commodities rout on bank assets. In general, bank earnings came in below expectations, but were saved for some by Q4 trading income. Capitalisation is still strong for the Nordic large banks.
Reporting season continues this week with many Nordic issuers releasing their Q4 reports.
To read the entire report Please click on the pdf File Below