EuroDollar 'Disturbance' Is Flashing Red In Junk Debt Markets

Tyler Durden's picture

Submitted by Jeffrey Snider via Alhambra Investment Partners,

Stocks may be ignoring the “dollar” and liquidity more broadly (at least as far as repurchases are concerned) but the continued stress in the eurodollar world has had an accumulating effect in some places. Primarily that has been shown in the once-thriving junk space, including more illiquid “products” like leveraged loans, which has continued in disfavor more recently. The shift in junk pricing, and thus credit risk perception, has confirmed to a great extent the overall “dollar” view, including the past two months or so.

By and large, there seems to be renewed concerns about liquidity, economy or both. It is universal and has even crept back into overall issuance (investment grade, by contrast, continues to be unperturbed). The usual extended commentary from this point is really unnecessary, given the repeated context, so here are the charts:

ABOOK June 2015 Dollar Lev Loan Mkt ValABOOK June 2015 Dollar Lev Loan Deal ValABOOK June 2015 Dollar Lev Loan LongerABOOK June 2015 Dollar HYG

Price negativity is, again, having an effect on issuance…

ABOOK June 2015 Dollar HY IssuanceABOOK June 2015 Dollar Corp Issuance

even if trading volumes continue to rise (which may be indicative of this intersection between liquidity overall and price breakdown).

ABOOK June 2015 Dollar Corp HY Trading VolABOOK June 2015 Dollar Corp IG Trading Vol

To emphasize the relationship between this negative price action and more general liquidity, we can use mortgage REITs as a partial proxy for liquidity in this related sector.

ABOOK June 2015 Dollar HYGREM

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ZH: And finally one can't help but get a sense of deja vu when reflecting on the last time a eurodollar disturbance hit... the credit cycle has turned and a dismal dose of reality is about to come upon US equity markets...

 

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Soul Glow's picture

Turn the machines back on!

:)

BlowsAgainsttheEmpire's picture

I felt a great disturbance in the Market, as if millions of currency traders suddenly cried out in terror, and were suddenly silenced.

KnuckleDragger-X's picture

Tsk, your assuming they are even aware of anything but their own bank accounts. The road goes on forever.....

Winston Churchill's picture

The rivets are popping.

Glass Seagull's picture

 

 

When WACdebt > WACequity*1.10

Then what motherfuckers? Then what!?!

BI2's picture
BI2 (not verified) Jun 24, 2015 12:56 PM

The EuroDollar disturbance coincides with the spiritual condition in both Europe and the US. We cannot divorce the physical from the spiritual. And what has been happening in the spiritual realm? A war on Christianity, the bedrock of western civilization.

https://biblicisminstitute.wordpress.com/2015/04/28/the-war-on-christian...

The_Small_Lebowski's picture

FYI - voodoo is not a popular topic on ZH

gcjohns1971's picture

What do you expect when even the Pope believes more in Marx than in Christ?

Catullus's picture

Oct12 is also when Our Masters selected to House Puppet Obama to distract us for another 4 years.

JustUsChickensHere's picture

After shemitah though ... so the House Puppet stuff is just theater

LawsofPhysics's picture

"markets"...   LOL!!!

surfvin's picture

Shit voodoo is the exclusive topic on zh