Cathy Gibson, global head of trading at Ninety One discusses how traders should prepare for a potentially chaotic week ahead amid fears of a US default, the ongoing pressures on regional banks and the flood of bond issuance in the market.
- Equities volumes are down week on week but bid-ask spreads are wide year to date. Investment-grade bond volumes are high and liquidity has been good.
- The cost of credit protection for Financials was up by 0.2% and short interest levels in Tech fell by 4.2%.
- Markets will be watchful of the US Debt Ceiling negotiations, data on US GDP Growth, Initial Jobless Claims, and Core PCE Prices.
- US axe data, which is within normal ranges, indicates a higher proportion of buying versus selling in credit.
Europe / UK
- Equities volumes dropped and bid-ask spreads widened. Bond bid-ask spreads were tighter week on week.
- The short interest levels in Energy fell by 9.4%.
- Data to look for this week: UK Inflation Rate and Producer Prices on Wed. Germany GDP data on Thurs.
- EU axe data, which is within normal ranges, suggests a higher proportion of EU dealer bids versus asks in credit.
- GBP axe data, within normal ranges, suggests much higher net selling Vs buying of credit.