Daily Flows
- Opportunities popped up yesterday for market participants with excess funds, with 5.25% still the standout 12 month rate in the A2/BBB bracket offered by several issuers.
- We saw large flows yesterday into foreign branch A1/A NCD issuers paying +55, which is now an above-market rate available through to tomorrow.
- Investors chasing yield just before Christmas should consider the fixed income space, able to take advantage of margins at +127 for 2 year BBB FRNs.
Festive Cheer for the Brits With Prices Down Across the Board
- Softer UK inflation overnight brought an early Christmas present to British markets, with YoY inflation down from 4.6% in October to 3.9% in November. Core inflation fell 0.6% to 5.1%, and monthly CPI was down 0.2%.
- The pound responded by falling 0.7% with the FTSE 100 up 1.02% yesterday.
- After BoE governors last month voted 6-3 to hold rates, with the dissenters advocating for a hike, the hawkish view looks to have flipped to a hold as a case builds for the BoE to bring forward rate cuts.
- Markets are now pricing in a May rates cut for the first time with a second by June.
- Across the Atlantic, the S&P fell by almost 1.50% thanks to a mid-afternoon sell-off as prices hit resistance levels, having previously been within 0.5% of the index’s all-time closing high earlier in the day.