Chinese exports boost sentiment
The global CDS markets enjoyed a good start to the week. All major credit indices tightened in reaction to the news that China reported an increase of 7.2% in its exports compared to last year, comfortably beating expectations of 5.5%.Chinese imports however in August missed expectations to grow at a rate of 7% year-on-year whilst most analysts predicted 11.3%.
The Markit iTraxx Europe and Markit CDX North America indices tightened 2.2bps and 0.9bps on the news to trade at 102bps and 81bps respectively midway through the European trading session.
CDS on mining companies also tightened. Glencore, Xstrata and Anglo American were trading at 235bps (-9.9bps), 145bps, (-7.6bps) and 187bps (-8bps) respectively late in the day.
This fine rally came despite growing tensions in Syria. The US Secretary of State, John Kerry, argued the risk of not acting against Bashar al-Assad is "greater than the risk of acting". Kerry's counterpart in the UK, William Hague, stressed that the US and UK were "closely aligned" against the Syrian regime. Credit markets are yet to see the repercussions of these announcements.
Key announcements this week:
Tuesday September 10th: Minutes from the previous Bank of Japan monetary policy meeting
Friday September 13th: Trade numbers for the euro area
Akif Ince, Credit Analyst, Markit