Adjusting course: Taking on risk; hedging equities Vs rates and leveraging CDSs

Published on 20 November 2023

Antoine Marmoiton, trader and analyst at Alken Asset Management, discusses what he and his team are focusing on this week and whether he thinks a recession is just around the corner. He dives into how Alken AM is realigning its strategy going into year-end; he looks at potential hedging opportunities in equities and rates and unpacks why he thinks traders should be paying attention to numbers around HY Cash and CDSs in the US.

North America

  • Equities up week on week and liquidity is good for the year. US investment grade volumes trend upwards and spreads are tight versus the same week in 2022.
  • Data: Mortgage Applications, Durable Goods, and Initial Jobless Claims November 22. Earnings e.g. NVIDIA, Dell, and Zoom.
  • Primary equities: 3 IPOs expected. If listed, the largest will be Lucas GC LTD.
  • US axe data, which is within normal ranges, indicates a higher proportion of buying versus selling in credit.

Europe and the UK

  • Equities volumes climbed, and liquidity improved week on week. Euro investment grade volumes surge and record-hitting bid-ask spreads.
  • Data: ECB President Christine Lagarde’s Speech on November 24. Earnings e.g. Compass and Rockwool.
  • Primary equities: No IPOs expected on European Exchanges.
  • EU axe data, which is within normal ranges, suggests a higher proportion of EU dealer asks Vs bids in credit.
  • GBP axe data, within normal ranges, suggests much higher net selling Vs buying of credit.