Brekkie Bond Wrap

Investment Grade:
The firm tone in Asian credit continued on Friday. We closed about 1-2 bps tighter in low beta names while BBB names were flattish, with property bonds weighed down ahead of potential new supply after Easter. Noble continued to recover with bonds up ~ 1 point. Petronas stabilized after the recent short squeeze tighter, despite lower oil prices. Indian names also benefited from decent real money demand.

High Yield:
It was a strong week in Asian HY with bonds up anywhere from ½ to 1 ½ points, apart from Chinese oil bonds which were down 2-3 points. Chinese real estate names were the outperformer, with stocks sharply higher on talk of further monetary easing by the authorities. Agile, however, was 1-2 points lower on poorer-than-expected earnings. Industrials, like the cement makers, were about 1 ½ points firmer on the week.

It’s back to data watching this week, with the all-important Non-farm payrolls data release on Friday night (consensus is +248K). Any print in the high 200s, and I think a June lift-off in the Fed funds rate will be firmly back on the cards, while anything less than 200K, will give the doves more ammunition to push the first hike out to perhaps even 4Q15. As for risky markets, we are back to a perverse ‘bad data is good for the market’ mentality. Strap yourself in for what looks like a wild ride this week…