Markets Headlines/Desk Color
· Derivatives desk color - Vols opened 100 bps higher in March +30bps 1yr to end lower on the day in the short dated and unchanged in the longer dated. After the European markets closed, spot staged a rally to down small and vols were very offered. Variance followed suit, bid in the morning and offered through the afternoon.
· PT desk color - 1.47 to 1 better to buy - Moderate Flow; Large Cap 69% and Mid Cap 22% of total Market Cap; Consumer Discretionary, Financials, and Information Technology better to buy; Health Care better to sell; ETF's 6% of sector flow.
· Equity flows – from K Worthington - Total equity fund flows (excluding ETFs) were positive, with inflows of $811 mm compared to $108 mm of outflows last week. This broke a four week outflow streak. In terms of sectors, Healthcare and Real Estate sector funds generated the strongest sales, with inflows of $57 mm and $41 mm, respectively. Tech sector fund flows were the weakest, with $4 mm of outflows.
· Fixed income flows - HG weekly funds had inflows of $750mm which brings MTD inflows to about $13B, below the $14B inflows last month. The trend of strong but gradually declining inflows for HG funds is continuing. HY funds had inflows of $470B, reversing the trend of the prior 2 weeks that saw a combined $1.7B of outflows. Beinstein
· JPMorgan credit strategy – E Beinstein - High Grade bond spreads and yields declined this week despite weaker equity markets, as investors took advantage of the yield and spread backup of the prior few weeks. New issue supply was light in February, contributing to the market rebound. Overall, we expect significant volatility, but with corporate fundamentals improving and technicals remaining favorable we remain overweight.
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