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24 January 2020 by jbchevrel

The corona-virus theme contaminated global markets today, shortly after the US open, as news showed more and more cases, dispatched in the world, including the US… Over 1,000 people are now identified as infected as people begin to travel for Chinese New Year. The Chinese market (talking A shares and to some extent china CDS) had moved yesterday, before the stocks close until next Friday. Some benchmarks lost between -3% and -4% in the single session of Thursday. Today risk was at the highs when the US opened (Main 43.5 IG 45.25) before quickly deteriorating. It felt like the headline SENATOR CITING 3RD US CASE OF CORONA-VIRUS triggered more profit-taking in SPX, leading to risk-off price action in all markets. On our European close, we have Main at the widest since… Thursday close, XOver at the widest since mid-December. But the most impacted asset class, as discussed previously on this blog, was oil. WTI crude is at the lowest level since the end of Oct-19, a tad above $54/bbl. as a result, we have continued to see under-performance from oil names especially in the US. Wider +3/+9 in US IG space and up to +60bp (WLL) in HY space. The cross-market IG/Main spread widened by almost 1bp as a result, as oil names in CDX IG are higher-beta than TOTAL, STLNO and BPLN….