During this phase of the market, we are hesitant to get too optimistic on ramps until there are signs in our credit metrics and relative performance of economically sensitive sectors to suggest it, but we do not want to get too negative because the Fed has backstopped corporate credit.  Indeed, yesterday saw the S&P 500 (SPX) get hit by 2%, but Investment Grade bonds showed signs of strength despite historic credit new issuance.

Early hump day drivers:

  • S&P equity futures are trading above Tuesday’s close, amidst a lower session in Europe and a mixed close in Asia overnight.
  • Increasing fears about a second wave of coronavirus infections after Dr. Fauci cautioned against reopening too prematurely.
  • China trade tensions also in focus with Senate Republicans set to introduce bill that would sanction Chinese officials over human rights abuses, as well as give president power to impose asset freezes and travel bans if Beijing does not cooperate with coronavirus probe.
  • Australian government officials weighing potential for China to broaden its trade retaliation after Beijing suspended meat imports and threatened tariffs on barley.
  • Fed’s Powell is expected to continue to highlight Fed resistance to negative rates in comments this morning, scheduled to begin at 9:00 ET.
  • In Europe, UK GDP growth data showed economy fell (5.8%) in March and contracted (2%) in Q1, whilst UK press focuses on Treasury leak detailing tax hikes and spending cuts to tackle coronavirus-relating spending.
  • Germany will reopen its borders with at least three countries from 15-May.



Past performance is not a guarantee of future results. Index returns are unmanaged and do not reflect the deduction of any fees or expenses.

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