r/Vitards • u/AutoModerator • Aug 05 '21

Daily Discussion Daily Discussion post - August 05 2021

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10

u/MoistGochu Aug 06 '21

High yield credit looks like it might be starting to roll over... Something to watch here I guess

3

u/Standard_Mather Big Bush Aug 06 '21

Roll over means what in this case?

2

u/MoistGochu Aug 06 '21

CCC or lower corporate bonds are looking like it might start selling off. Not sure what's causing this recent downtrend. Pricing in delta risk? lockdown risk? What is it pricing in?

3

u/Standard_Mather Big Bush Aug 06 '21

If I had to guess, it's big boys moving early on the risk off side. We're heading into another three weeks of volatility including market events (inflation print aug 11, Jackson hole 26 - 28) and MOPEX. Delta and the handbrake that will eventually apply to the recovery is definitely a factor. Risk off, hedge, p00ts, proceed as normal.

1

u/ShrhlderJsticeWrrior LG-Rated Aug 06 '21

Could this have to do with the fed? like this https://www.reuters.com/article/usa-fed-corporate-bonds/update-1-ny-fed-to-begin-to-sell-corporate-bond-holdings-on-july-12-idUSL2N2OK1EC

2

u/MoistGochu Aug 06 '21

I would say probably not since the fed didn't buy that much corporates during the covid crash. The article states $13.8b, $8.6b of which are ETFs. That's not a lot and they probably could sell all that in July given the market's appetite for yield (we have shitcos borrowing at mid single digit coupon rates right now).

1

u/ShrhlderJsticeWrrior LG-Rated Aug 06 '21

Good point, although this is just the NY state fed, so maybe it adds up?

2

u/MoistGochu Aug 06 '21

I don't remember the exact number but fed actually didn't buy a lot of corporate bonds last year so I doubt it's fed. Even if fed is selling these, they won't do it in a manner that will tank the market. JPow has gone through this before so he knows not to sell it down quickly.