Fitch Ratings declared their downgrade of Ireland, Wednesday, and the latest US job report missed the estimates. However, disappointing economic data from the US couldn’t contain the rally in credit markets today as the positive sentiment from yesterday showed little sign of dissipating.
“In fact, it is possible that the weaker than expected ADP employment report acted as a spur to risky asset.”
The survey showed that the US private sector cut 39,000 jobs in September, easily missing expectations of a 20,000 gain. After Bank of Japan’s aggressive easing yesterday investors appear convinced that the Federal Reserve will follow with more quantitative easing, vice president Gavan Nolan at Markit Credit Research writes in his daily alert.
Gold is at record highs with investors seeing policy-induced inflation down the line.
A relatively strong ISM non-manufacturing report yesterday was viewed as no impediment to the FED taking further unconventional measures.
“If the ADP report is a reliable indicator of non-farm payrolls – most would say it isn’t – then another set of weak data will give more ammunition to the QE proponents,” Gavan Nolan comments.
The Markit CDX IG index has outperformed relative to the Markit iTraxx Europe in recent days, with the basis between the two indices at its widest for some time. This narrowed slightly today as European markets took their cue from rallying US and Asian markets.
Sovereigns, however underperformed for a second day, not helped by a Fitch downgrade to Ireland.
The rating agency cut its rating one notch to A+, citing the “exceptional” cost of the bank bailouts. Fitch also placed it on negative outlook, warning of economic uncertainty and a possible weakening of political resolve.
Ireland’s spreads started the day about 13bp tighter at 425bp but the Fitch announcement led to its spreads widening out to 450bp.
“While unwelcome for the sovereign, it should be borne in mind that the downgrade had been more than priced in by the market. Ireland has an implied rating of single B, according to Markit data,” Nolan points out.
Markit BOAT – Equity Trading Highlights
Markit BOAT is a trade reporting platform which consolidates pan-European cash equity trade data from MTFs, Dark Pools and OTC transactions. The trading activity in this report took place on 5th October 2010 and was published by Markit BOAT on the same day. Trading activity reported with the “Market Condition” flag is excluded from this report. Such trading activity is not relevant because the trade price and/or trading process does not reference or correlate with the then current market price.
Unique Market Activity
The “Unique Market Activity” section lists stocks which were not active on Markit BOAT on the previous trading day.
|TOYOTA MOTOR||Consumer Goods||765,200||19,717,856|
|ALL NIPPON AIRWAYS||Consumer Services||1,117,000||2,918,171|
|FIRST QUANTUM MINERALS||Basic Materials||37,630||2,135,472|
|HORNBACH HOLDING||Consumer Services||15,451||1,111,430|
|INTERNATIONAL BUSINESS MACHINES CORP.||Technology||9,954||973,090|
|PROCTER & GAMBLE||Consumer Goods||22,403||970,926|
Top 10 ETF
|DJ STOXX 600 OPTIMISED BANKS SOURCE ETF||1,501,369||107,595,442|
|DB X TRACKERS – MSCI EMERGING MARKET TRN INDEX ETF||546,448||16,213,805|
|ISHARES PLC – ISHARES FTSE 100||2,440,139||15,624,684|
|DJ STOXX 600 OPTIMISED INDUSTRIAL GOODS & SERVICES SOURCE ETF||109,845||12,058,310|
|ISHARES MSCI JAPAN FUND||1,422,805||10,250,835|
|AMUNDI ETF CAC 40||208,945||8,281,748|
|DB X TRACKERS – MSCI WORLD TRN INDEX ETF||350,000||7,268,580|
|DB X TRACKERS – DAX ETF||116,458||7,156,578|
|DJ STOXX 600 OPTIMISED FOOD & BEVERAGE SOURCE ETF||40,900||6,818,372|
|MSCI WORLD SOURCE ETF||286,000||5,951,000|
Top 10 Trades
|BP||Oil & Gas||10,487,180||51,883,227|
|TOTAL||Oil & Gas||1,200,000||45,359,999|
|SNAM RETE GAS||Oil & Gas||10,000,000||36,799,080|
|Name||Sector||Volume||Volume (T-1)||% Change|
|CABLE & WIRELESS WORLDWIDE||Telecoms||18,028,306||829,777||2073%|
|SNAM RETE GAS||Oil & Gas||15,248,043||3,032,024||403%|
|BP||Oil & Gas||15,059,224||8,540,518||76%|
- Fitch Downgrades Ireland (dailyfinance.com)
- 149 Zombie ETFs To Avoid (blogs.forbes.com)
- Treasuries, Yen Rise on Fed Speculation; Most U.S. Stocks Fall (businessweek.com)