It was a slow start to a week, even before US inflation releases on Wednesday and Thursday prompted a fresh bond sell off and deepened the debate on whether a further 25bps hike in US interest rates was likely in October. The volatility continued as an AI led equity sell-off took US Treasury yields back to their lowest level since late September.
10-year US treasury yields ended 18bps lower at 5.08% and Bunds dropped 20bps to 3.42% compared to a peak at 3.64% on 01 October, while the much watched OAT/Bund spread ended at plus 137bps slightly below the previous week’s close at plus 141bps.
Oil prices and their impact on inflation remained closely watched with Brent Crude at around $106.80 per barrel early in the week, up from $104.70 on 9 October before falling back to around $105.20 early on Friday.
The iTraxx 125 index that tracks liquid European corporates and financial institutions with investment grade credit ratings widened to 62.9bps, 10bps higher than a month ago.
Nevertheless €24.4bn was raised in European investment grade primary markets this week (up from €12.9bn the week prior) with SSA supply accounting for 80% of the total at €19.5bn. This was ahead...
