Corporate bond allure boosted by Euro-spat

Credit Suisse (CS) – Investors also tossed out paper issued by credit-crisis bailout victim Credit Suisse. It was on the receiving end of a lifebuoy tossed out in the rough seas in 2009 by the Swiss government. In an effort to prevent the same thing happening again the Swiss are introducing more stringent capital requirements. For its part Credit Suisse said the proposals were “tough but doable,” adding that it would need time to digest while implementation might require it to relocate parts of its body outside its domicile. Nervous investors dumped more than $20mm of its August 2020 paper on Wednesday and in a rush to exit slashed the price per $1,000 invested to 99.48 for a loss of $2.40 while raising its yield to 4.44%. The spread to treasuries widened by four basis points to 145 basis points. ADR shares in Credit Suisse tumbled to the lowest since December 21 in New York on Wednesday.

Muni-Bond Corner – Outperformance in the muni-bond market that characterized Tuesday’s session came to an abrupt halt midweek as treasury yields slide over Greek default fears. Several new issues are holding the muni-market from rallying. Princeton University issued $250mm in tax-exempt securities Wednesday reversing a slashes to 2009 capital expenditures following a decline in its endowment. These bonds are priced on top of the 30 year triple-A curve at a yield of 4.40%.

California lawmakers are racing to approve a balanced budget by midnight tonight at the risk of losing pay. The budget would extend temporary taxes to partially plug a gaping $9.6 billion budget gap. California is rated single-A and the rating agencies have said it is important to pass a budget that relies on recurring revenues or spending cuts, rather than one-time fixes. If delayed, the state will be unable to issue new debt.

The number of people who reported incomes of at least $200,000 and paid no U.S. income taxes jumped 79.5% in 2008 from 2007 according to an Internal Revenue Service study.

Andrew Wilkinson is a Senior Market Analyst at Interactive Brokers LLC

Note: The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Interactive Brokers LLC nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither IB nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance is not necessarily indicative of future results.

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About the Author
Andrew Wilkinson

Andrew is a seasoned trader and commentator of global financial markets. He worked for several London-based banks trading cash and derivatives before moving to the U.S. to attend graduate school. Andrew re-joins Interactive Brokers following a two-year stretch at a major Wall Street broker-dealer as their Chief Economic Strategist. His coverage of stocks, options, futures, forex and bonds regularly surfaces in global media, and over the last several years Andrew has made many TV appearances on Bloomberg, BBC, CNBC and BNN and Yahoo Finance.

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