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Loans Versus Bonds Relative Value: Week of October 1
The convergence squeeze continues as loans have trickled wider for the third week in a row even as bonds are at 2009 tights, and by all signs about to break 700 bps. The drift is systemic as there were no major outliers except for Mediacom loans which unexpectedly shot up 400 bps, although this would appear to be a data error as there is now a negative basis in the name to the tune of almost 180 bps.
It appears that the primary market exuberance is still affecting the secondary market as key hedge funds, which transact mostly in credit having left equities to the quants, are still aggressively trying to make it to their respective 2008 high water marks.
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Tyler, wheres our daily Bloomie screenshot of a volumeless ramp-up which is getting out of control?? I am all up for any real reasons why the market is in the green aside from useless upgrades, extension/expansion of housing bubble tax credit, oil prices down and insiders selling their stock hand over fist.
Is the last of the Fed QE monies gone yet?
Yes, volume decreases but moneyflow increases. I guess one could come up with some hypoethes as to why that is.