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MACRO/NARRATIVE
Focus of the market remain always on inflation and rates (despite some stabilization in second half of the week).
Surprise index continue to diverge with some weak data in US (Empire manufacturing, job claims, etc) vs ROW. Attention is now on the start of reporting season too (with more investigation on price, margin and passthrough cost).
Next week the big event will be FED (where 4 hike are priced by market).
MARKET:
High real rates weighter on risky asset (look below at stock to bond and credit to rates). Geopolitical risk in Russia/Ukraine impacted sentiment too.
In commodities oil surpassed recent high (Brent at 89$) thanks to strong demand despite Omicron (China is low due to 0 covid policy but mobility in DM is high) and low supply (fear of low spare capacity ahead). Agri mkt is strong too thanks to high demand of ethanol for transport.
In credit a toxic mix of high rates, high supply and risk aversion impacted spread and total return was negative for all subsectors. With the start of the reporting season supply will start to decrease and could offert support on spread again.
MICRO:
Winners
SMTPLN: strong performance on Moody’s rating affirmation after the planned unsecured notes
ADJGT: continue to be supported by disposals news
Losers
IPGIM after new issuance at wide discount DTEREN and METALG due to volatility related to Russia/Ukraine crisis Have a great weekend. Enjoy and relax.
See you next week!