Themes For The Week Ahead

• All three iTraxx indices are at new multi-month lows, and show potential for new multi-year tights - especially on the Main and Senior Financial
• 2.820 is the level to watch on the HY OAS Index. While this caps, watch for renewed tightening to 2.695/2.633. Above signals basing/opens 2.898
• Leveraged Loans Index corrects below 95.738 to signal near-term topping. Downside risk now seen to 95.554/95.218
• Stoxx 600 extends to new record highs. Upside potential is seen to Fibonacci projections at 666.68, perhaps 686.35/693.28
• Seeing near-term gains on the German, US and UK 10yr yields before the recent declines resume

iTraxx Main – 5mth lows, risk to 49.393/47.102
Look to sell higher

• Extends the 3½mth tightening trend to post new 5mth lows just beneath 50.690 (10 Feb higher low)
• Easing studies signals risk to 49.393 (2026 low – 13 Jan), which guards 47.102 (2022 low – 4 Jan), perhaps 44.133 (2021 low – 16 Sep)
• Only above the 52.521/52.546 zone (26 Jun high/29 May former low) would allow additional near-term widening to 55.177 (8 Jun lower high)

iTraxx Senior Financial – Risk to 52.236/50.296
Look to sell higher

• Continues the 3½mth tightening trend to post 4½mth tights just below 53.777 (19 Feb higher low)
• Negative technical studies suggests tests of 52.236 (2026 low – 3 Feb), which guards 50.296 (2021 low – 17 Sep) then 48.757 (24 Feb 20 low)
• Only a return above 54.995/55.107 (26 Jun high/29 May former low) would offer near-term relief towards 57.757 (8 Jun lower high)

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