Cantella Rates Credit Dashboard--12/9/21

  Not much overnight……..Corporate issuance remains strong with another 5.2 billion priced yesterday. This pushed the monthly volume to over 60 billion, setting the December record set 7 years ago and it is only December 9. So while we see some lockdowns in Europe demand remains strong. I had two conversations with customers regarding the Fixed market going into 2022. Here is my response. 

     In regards to Credit -when the window is open as it has been since Monday, demand remains very strong. As we saw last week for a true Risk Off trade; I.e. Equities, led by options, CDX Shorts etc.. issuance gets problematic QUICKLY. There was a Morgan Stanley piece last week that proffered buying Credit instead of Treasuries as you receive Risk Premium in a rising rate environment where economic fundamentals are improving. Certainly in theory that makes sense. CONCLUSION: Demand for Credit will remain robust in general. When we see pockets of wider spreads like last week , most likely a buying opportunity. Technically, my thesis is simple. Street is Short Credit --Period.. This will cause at times gap widening and gap tightening. Lastly, credit work will be more important going forward as Central Banks exit the markets. Regarding the curve, tough to call. General trend is for flattening. ’29 / ’30 maturities may make sense or even think of a bar-bell with’ 24 and ‘25 paper combined with ’30 ’31 paper. Just a humble opinion. CIW 

     30 year auction at 1:00. Treasuries better with 10’s at 1.47%. That’s it . Have a great day.