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Yahoo
10-04-2025
- Business
- Yahoo
Global credit default spreads narrow as markets rally
SINGAPORE/LONDON (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. Sign in to access your portfolio
Reuters
10-04-2025
- Business
- Reuters
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.
Zawya
07-04-2025
- Business
- Zawya
Trade war, recession fears put stocks on path for biggest daily drop since 2008
The emerging market stocks index on Monday was heading for its biggest one-day selloff since the 2008 global financial crisis, as U.S. President Donald Trump remained determined to upend the global trade order that markets worry could trigger a recession. Investors started the week parsing Trump's comments that signaled they would have to endure more pain and he would not do a deal with China until the U.S. trade deficit was sorted out, which drove MSCI's EM stocks index down by 7.9%. A currencies gauge weakened 0.4% to the dollar and was set for its largest daily drop since November, with those of China, India dipping 0.4% each, while South Africa's rand and Mexico's peso weakened over 1% each. Financial assets in the developed, developing and the frontier world along with commodity prices were extending last week's rout after the U.S. President's restrictive trade policies was met with quick retaliation from Beijing, fanning worries that a global trade war could weigh on economic performance. Investors are also anticipating a response from Europe this week, while other trade-reliant economies in south east Asia are hoping to strike trade deals with the U.S. "Investors had assumed Trump's trade taxes were a bargaining tool, as during the first term. If the competence of policymaking is questioned, markets will worry that economic damage will be lasting," said from Paul Donovan, chief economist at UBS Global Wealth Management. On Monday, equities in China slid 7% and those in Hong Kong tanked 13.2% - its steepest decline since 1997. Brokerage Goldman Sachs said it expects Chinese policymakers to accelerate fiscal easing measures significantly to offset the repercussions of higher tariffs. MSCI's index tracking Asia-Pacific shares outside Japan slid 8.4% and a plunge in Korean shares triggered a trading curb for the first time in eight months. Investors also began to bet on the increasing likelihood of corporate and sovereign credit defaults, as the five-year credit default swap spread on the Markit Itraxx Asia ex-Japan index, widening to its highest since August last year, according to S&P Global Market Intelligence data. The default swaps on China jumped 82 basis points, while that of South Africa climbed seven bps. International sovereign bonds of a number of frontier markets also suffered sharp selloffs with those of Sri Lanka , Egypt and Kenya falling over 4 cents on the dollar. Markets were pricing in that a stronger dollar against weaker emerging market currencies, combined with a weak global trade environment could increase the risk of a debt spiral in emerging markets. Some economies such as Sri Lanka and Pakistan were just regaining their footing after defaults triggered by the COVID pandemic. Pakistan's hard-currency bonds lost over 10 cents putting it below the 70 mark, widely perceived as distressed debt. Worries of a global recession also had markets pencilling in the likelihood that the U.S. Federal Reserve could lower borrowing costs by at least five 25 basis points by December, according to data compiled by LSEG. Markets are also expecting sluggish economic performance to also speed up interest rate cuts by central banks in developing economies at their upcoming monetary policy meets, such as India and Singapore. The market rout continued, with equities in South Africa Indian and Turkey falling about 2% to 4% each. An index tracking central and eastern European stocks tumbled 4.7%, with those of more open economies such as Czech Republic and Hungary falling 5.4% and 6.9%, respectively. Hungary's forint depreciated 0.5% against the euro and Poland's zloty dropped 0.8%. Currencies such as the euro and Swiss franc outperformed the dollar as markets priced in the likelihood that the U.S. economy could also be hit with a recession, in the face of tighter trade. (Reporting by Johann M Cherian in Bengaluru; Editing by Shailesh Kuber)
Khaleej Times
07-04-2025
- Business
- Khaleej Times
Global credit starts to wobble as market pain spreads
Global credit markets began to come under fire on Monday, driving the cost of insuring against corporate and sovereign default higher, as recession fears rippled across equities, commodities and currencies. Trillions of dollars have been wiped off global stock markets in the last three days, as investors have taken fright at the range and severity of the tariffs unveiled last week by U.S. President Donald Trump. Fears of a sudden global recession have hit asset markets hard and credit, which is often seen as a warning sign that a deeper downward correction may be approaching, is starting to show the strain. The five-year credit default swap spread on the iTRAXX Europe Crossover index, which reflects the cost of insuring against the risk of default for 75 of the most traded sub-investment grade companies, shot up by the most in a single day since the banking crisis of March 2023, according to SP Global Market Intelligence data. It hit its highest level since November 2023. "If we see credit struggling, spreads widening out significantly, precious metals and other havens like the yen or the Swiss franc start to fall significantly, that's when all the alarm bells start ringing," Michael Brown, senior market strategist at Pepperstone, said. Overnight in Asia, the Markit Itraxx Asia ex-Japan index, comprising sovereign and company debt, rose about 26 basis points to its highest since August last year. Sovereign spreads in Europe edged up, with those on five-year government for Germany at 15 bps, their highest since January last year, while those for France were at their highest since 2020, according to SP and LSEG data. Sovereign spreads for China, Vietnam, Indonesia, Thailand and Malaysia also widened, SP Global data showed, hitting, in the case of Indonesia and Thailand, levels not seen since 2022. Unusually, the pressure on credit has followed, rather than led, a tailspin in world stock markets as Trump declared a trade war by levying the highest tariffs on U.S. imports in over a century. U.S. equity futures were down nearly 4% by mid-session in Asia and selling in credit came as equity markets from Hong Kong to Sydney were crumbling. "It's not just the equity market. We've seen credit spreads gap wider materially and we're also hearing various fund flows going the other way as well, as people try to get into cash or other commodities," said Simon Ward, head of debt capital markets for Australasia at Mizuho in Sydney. He said the debt market would probably enter a "wait and see" mode, with deals on pause as volatility has spiked. The spread or difference in yield between U.S. Treasuries and the Ice BOFA index of U.S. investment grade debt has widened about 20 basis points since Trump's tariff announcements, and for high-yield U.S. debt it has widened about 96 bps.
Yahoo
07-04-2025
- Business
- Yahoo
Asia credit starts to wobble as market pain spreads
By Tom Westbrook SINGAPORE (Reuters) -Credit markets turned shaky in Asia on Monday, with the cost of insuring against corporate and sovereign default higher as recession fears rippled across financial markets. The five-year credit default swap spread on the Markit Itraxx Asia ex-Japan index, comprising sovereign and company debt, rose about 26 basis points to its highest since August last year, according to S&P Global data. Sovereign spreads for China, Vietnam, Indonesia, Thailand and Malaysia also widened, S&P Global data showed. Unusually the pressure on credit has followed, rather than led, a tailspin in world stock markets as U.S. President Donald Trump declared a trade war in earnest by levying the highest tariffs on U.S. imports in over a century. [MKTS/GLOB] U.S. equity futures were down nearly 4% by mid-session in Asia and selling in credit came as equity markets from Hong Kong to Sydney were crumbling. "It's not just the equity market. We've seen credit spreads gap wider materially and we're also hearing various fund flows going the other way as well, as people try to get into cash or other commodities," said Simon Ward, head of debt capital markets for Australasia at Mizuho in Sydney. He said the debt market would probably enter a "wait and see" mode, with deals on pause as volatility has spiked. The spread or difference in yield between U.S. Treasuries and the Ice BOFA index of U.S. investment grade debt has widened about 20 basis points since Trump's tariff announcements and for high-yield U.S. debt it has widened about 96 it has widened about 96 bps. Sign in to access your portfolio
