Global credit default spreads narrow as markets rally
SINGAPORE/LONDON, April 10 (Reuters) - The cost of insuring against sovereign and corporate defaults on European and Asian debt fell on Thursday as investors breathed a sigh of relief at a pause on some of the heaviest U.S. tariffs.
U.S. President Donald Trump on Wednesday stunned markets with an abrupt decision to introduce a 90-day pause on the import tariffs on dozens of countries that were due to come into effect, with the exception of China.
A relief rally swept through global markets, lifting stocks and currencies and introducing some relief into the U.S. Treasury market after an earlier savage selloff on fears over the likely economic damage from Trump's hefty tariffs.
By Thursday in Europe, the iTRAXX Crossover index , which tracks the cost of insuring against default among 75 of Europe's most traded low-rated companies, fell to 376 bps from 427 bps at the close on Wednesday. An index tracking the cost of insuring against default among 125 of the highest-rated entities fell 11 bps to 74 bps, according to S&P Global Markit Intelligence.
Both indexes were still just a whisker below Wednesday's 30-month highs.
Charu Chanana, who is chief investment strategist at Saxo, advised clients to manage their fixed-income exposure.
"Keep duration and credit risk in check amid persistent bond market volatility. And stay flexible: The next 90 days are likely to bring more noise than clarity. Use pull-backs to rebalance, not chase," she said.
In terms of sovereign debt, five-year U.S. sovereign credit default swap spreads contracted by just 1 basis point on the day to 52 bps, as did those on five-year Chinese sovereign CDS, which eased to 74 bps from 75 bps, showing investor nervousness around the intensifying trade war between the world's two largest economies has not abated.
By contrast, five-year CDS spreads for Japan shrank to 21 bps from 25 the day before.
The five-year credit default swap spread on the Markit Itraxx Asia ex-Japan index, comprising sovereign and company debt, fell about 8 basis points to 114 bps, according to S&P Global Market Intelligence.
The moves unwind without fully reversing a recent spike on fears that U.S. tariffs tip the world into recession.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
10 minutes ago
- Reuters
EUROPE Geopolitics, rate decisions keep markets cautious
A look at the day ahead in European and global markets from Johann M Cherian Speculation over potential U.S. intervention in the Middle East has grabbed the market's attention this week, rattling investors who were otherwise focused on a series of central bank meetings that are expected to give outlooks on growth and inflation. President Donald Trump was keeping the world guessing on whether the U.S. might join Israel's air campaign against Iran, telling reporters outside the White House on Wednesday: "I may do it. I may not do it. I mean, nobody knows what I'm going to do." Bloomberg News also reported that senior U.S. officials are preparing for a possible strike on Iran in the coming days. This ambiguity has kept markets on edge for nearly a week now, while cracks are emerging among Trump's support base, some of whom fear the president may stray from his isolationist foreign policy stance. Investors have learned to be patient in their response to Trump's often unpredictable policymaking style, although analysts warn that any sign of escalation in the Middle East could spark a knee-jerk reaction in financial markets. Global stocks have steadily cooled after a recent rally, and analysts say the markets' biggest worry remains the lack of headway towards highly anticipated trade deals with Trump's tariff deadline less than a month away. Investors in developed-market bonds have approached the traditionally safe-haven assets with some trepidation. Ten-year bonds in Germany , Britain and the U.S. have been trading in tight ranges over the past few sessions. Amid all the uncertainties, markets are weighing potential inflationary pressures that could keep central banks hawkish. Increased military spending in the U.S. and European economies could drive up government debt levels and undermine the already waning appetite for developed-market bonds. On Wednesday, optimism around the Federal Reserve signalling lower borrowing costs this year was immediately tempered by Chair Jerome Powell's statement that he expects tariffs to add to inflation pressures. The Bank of England will most likely flag the repercussions from a recent spike in crude oil prices when it announces its rate verdict later today, despite signs that price pressures cooled as expected last month. Policy decisions today by central banks in Switzerland and Norway will also be in focus, after the European Central Bank earlier this month chose to err on the side of caution when it hinted at a pause to its rate-cutting cycle. Key developments that could influence markets on Thursday: - Central bank decisions due out of Britain, Switzerland, Norway and Taiwan - Commentary from ECB's Luis de Guindos, Francois Villeroy de Galhau - Eurogroup meeting in Luxembourg - Eurozone finance ministers to discuss Bulgaria's euro adoption, fiscal recommendations - U.S. markets closed for Juneteenth National Independence Day Trying to keep up with the latest tariff news? Our new daily news digest offers a rundown of the top market-moving headlines impacting global trade. Sign up for Tariff Watch here.
The Herald Scotland
an hour ago
- The Herald Scotland
Scotland could be 'world leader': Heriot-Watt's National Robotarium
The 'Making Scotland a World Leader in Robotics' policy paper is being launched today by Stewart Miller, chief executive of the National Robotarium global research institute. Mr Miller warned that urgent action is needed to prevent Scotland from falling further behind international competitors, and outlined what he sees as 'a clear pathway to robotics leadership'. He said: 'We're at a critical juncture. Countries like China, America, and Singapore are racing ahead in robotics adoption and innovation, while the UK ranks just 24th globally for robots per manufacturing worker. But Scotland has exceptional foundations that, with the right approach, could make us a global robotics powerhouse.' Healthcare, offshore renewables and manufacturing are identified as 'three sectors where Scotland can establish clear competitive advantages'. The policy paper outlines a 'comprehensive vision for establishing Scotland as a global robotics powerhouse' through what are described as four strategic initiatives. It proposes the creation of 'Robotics Scotland' as a national coordinating body to accelerate collaboration between research, industry, and international partners. The second proposal is for the establishment of a national healthcare robotics initiative to 'position Scotland as the global leader in medical robotics innovation'. The paper also proposes the launch of a marine robotics innovation programme, 'leveraging Scotland's offshore expertise to dominate this emerging market'. And the fourth proposed strategic initiative is development of a national robotics skills strategy, 'ensuring Scotland has the talent to lead across all robotics applications'. Professor Gillian Murray, deputy principal of business and enterprise at Edinburgh's Heriot-Watt University, said: 'Heriot-Watt has a proud 200-year heritage of pioneering engineering and innovation that has shaped industries worldwide. The National Robotarium exemplifies our commitment to mobilising intellectual and capital assets for global impact. 'This policy paper demonstrates how Scotland can build on our university sector's world-class research capabilities to establish genuine leadership in the technologies that will define the future economy.' The National Robotarium declared that 'the sobering international picture reveals the scale of the challenge facing Scotland'. It said: 'Asia dominates with 72% of global robot installations, while Germany installs nearly eight times more robots than the entire UK. Denmark has become a robotics leader through strategic investment in collaborative robots and automation, creating a thriving ecosystem that attracts international companies and talent.' Mr Miller said: 'Other nations aren't waiting - they're building robotics capabilities that will define their economic futures. While we've been developing excellent innovations, our European neighbours and countries like Australia have been creating the systems and support that turn innovation into economic leadership. We risk becoming developers of technology for other countries to commercialise.' The policy paper highlights what is described by the National Robotarium as 'the stark reality of missed opportunities'. The National Robotarium highlighted the potential for Scotland to become a world leader in robotics amid a global revolution in this arena (Image: National Robotarium) Around 20,000 of 27,000 small and medium sized enterprises in the UK manufacturing sector currently operate without robots, 'representing a massive untapped opportunity for productivity improvement and economic growth', the paper states. It adds: 'If UK automation levels matched the world's most automated countries, productivity could increase by 22%. Over the next decade, robotics and automation technologies could contribute £184 billion to the UK economy, transforming our nation's manufacturing capabilities.' The National Robotarium declared 'the healthcare sector presents equally concerning gaps'. It added: 'While the global healthcare robotics market is projected to grow to £3.4 billion by 2028, Scotland struggles to translate its clinical expertise and innovation capability into systematic adoption, potentially missing out on £21.7 million in annual efficiency savings for NHS Scotland alone.' Read more Mr Miller said: 'We have companies like Edinburgh-based BioLiberty developing breakthrough stroke rehabilitation technology, but they're launching in North American markets because we haven't created the pathways for domestic success.' He added: 'We're funding innovations that primarily benefit other countries.' However, his analysis concludes Scotland is 'uniquely positioned to reverse this trend and establish genuine robotics leadership', the National Robotarium noted, adding: 'Unlike countries starting from scratch, Scotland possesses world-class research excellence, outstanding engineering heritage, and proven entrepreneurial spirit.' Stewart Miller, chief executive of Heriot-Watt University's National Robotarium (Image: Ben Glasgow/ National Robotarium) Mr Miller said: 'The difference between concern and optimism is action. Scotland has all the ingredients needed - we just need to combine them more effectively.' He declared the National Robotarium had 'demonstrated what's possible', supporting more than 100 jobs and nurturing 14 innovative companies in less than three years. Mr Miller added: 'This success can be replicated and scaled.' The National Robotarium said: 'The offshore renewables sector offers immediate opportunities, with robotics applications in wind farm operations alone representing a £341 million annual market by 2030. Scotland's global leadership in offshore energy provides a natural platform for marine robotics excellence. 'Healthcare presents extraordinary potential for Scottish innovation. With world-class clinical expertise and growing recognition among healthcare leaders of robotics possibilities, Scotland could become the global centre for healthcare robotics development.' The National Robotarium added: 'Manufacturing offers perhaps the broadest opportunity, with Scotland's expertise positioning it to capture significant market share as automation demand accelerates across thousands of ready-to-adopt businesses.' Mr Miller said: 'Every challenge becomes an opportunity when viewed through the robotics lens. NHS pressures could drive healthcare robotics innovation. Manufacturing skills shortages could accelerate automation adoption. Our offshore energy leadership could establish Scotland as the global centre for marine robotics.' The emergence of 'embodied' AI (artificial intelligence) has created 'unprecedented opportunities for countries that move decisively', the National Robotarium said. It added: 'With over a hundred companies worldwide receiving billions in investment to develop genuinely human-capable systems, Scotland's combination of AI expertise and robotics capability positions it perfectly for this next wave of innovation.' Mr Miller hammered home his view that Scotland's advantages extend beyond technology to include cultural and institutional strengths. He believes Scotland's collaborative approach between industry, academia, and government - 'exemplified by the National Robotarium's 'triple helix' model' - creates 'ideal conditions for rapid ecosystem development'. The National Robotarium declared its track record 'provides compelling evidence of Scotland's potential'. It added: 'Since launching in September 2022, the facility has become internationally recognised, with the Tony Blair Institute for Global Change citing its model in their landmark October 2024 report on robotics leadership. The recent expansion to Orkney through the International Blue Economy Robotarium demonstrates how targeted sector focus can accelerate market leadership.'
Reuters
2 hours ago
- Reuters
Gold prices tick up as Middle East tensions buoy demand
June 19 (Reuters) - Gold prices gained on Thursday, as rising tensions in the Middle East buoyed demand for the safe-haven asset, although the U.S. Federal Reserve's cautious stance on future rate cuts kept gains in check. Spot gold was up 0.2% at $3,376.48 an ounce, as of 0215 GMT. U.S. gold futures eased 0.4% to $3,393.70. "Gold has made a modest bounce as we await the next steps in the Israel-Iran conflict. If the U.S. does decide to get directly involved in the conflict this could raise the geopolitical stakes," KCM Trade Chief Market Analyst Tim Waterer said. Geopolitical tensions remained heightened as U.S. President Donald Trump on Wednesday refrained from confirming whether the U.S. would join Israel's bombardment of Iranian nuclear and missile sites, prompting residents of Tehran to leave the city amid ongoing air strikes. The U.S. military has moved some aircraft and ships from bases in the Middle East that may be vulnerable to any potential Iranian attack, two U.S. officials told Reuters on Wednesday. Gold is often used as a safe store of value during times of geopolitical and financial uncertainty. The Fed held interest rates steady on Wednesday. Fed policymakers still forecast slashing rates by half-a-percentage point this year, but they slowed the pace of future cuts. However, Fed Chair Jerome Powell cautioned against putting too much weight on this outlook, warning of "meaningful" inflation ahead as higher import tariffs loom. "The Fed was not as dovish as some had hoped, and I'd argue Powell was a tad more hawkish than many would like. The U.S. dollar is likely at oversold levels, and that is likely to cap gains on gold over the next few weeks," said Matt Simpson, a senior analyst at City Index. Elsewhere, spot silver eased 0.2% to $36.66 per ounce, platinum rose 1.5% to $1,342.36, while palladium gained 0.6% to $1,055.18.
