Global credit steadily tightened last week on Trump’s decision to call off Mexican tariffs and rising expectations of a Fed rate cut. US credit finished the week 3-5 basis points tighter, led by industrials and autos, while treasury yields fell after Wednesday morning’s inflation data surprised to the downside. The primary market was busy with $29 billion in new issues printed, once again beating weekly estimates.
It was a busy week for Canadian credit as the new issue floodgates opened on the back of solid macro tone and low yields. Eight issuers combined for a total of $4.8bn including tranches from Laurentian Bank, Fairfax, John Deere and Keyera. Most deals were well received and credit spreads generally traded 3 bp tighter even with the glut of new paper. This week could set the narrative for the months to come with the FOMC, the ECB and the BOJ all holding important meetings. Investors are expecting a very dovish outlook on global central bank policy, thus creating headline risk if any of the countries deviates from expectations.