Daily Flows & Insights – Festive Cheer for the Brits With Prices Down Across the Board

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‚Äôs all-time closing high earlier in the day.
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Curve Team
Josiah Binet