Equity and Credit Disconnected (Again) As We Approach 3pm Rumor-Time
Investment grade and high yield credit spreads are wider on the day (with investment grade underperforming so far) but the divergence between a somewhat well-synced equity and credit market yesterday and today's ramp in stocks is remarkable. We suspect this is the hangover from print-print-print expectations playing out in a more USD-based numeraire stock market but the underperformance of HYG once again suggests hedgers are more active in credit and less exuberant than equity players. Broad risk markets are supportive of ES up here as CONTEXT remains in sync helped by Oil (which is odd given the divergent drop in the Energy sector earlier this afternoon - CVX/RIG leak) and TSY 2s10s30s mostly.
Today's dispersion is of particular note among the last few weeks.
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