It was a volatile week especially in the equity market, in particular on the US side. High Yield has been more resilient posting positive return close to 8 bps this week. Beyond the underperformance of tech names, the other news in the markets are Brexit and ECB response to FED new inflation target. 

Boris Johnson started the week claiming his plan to break internally law over Brexit was a technical issue with little consequence. Even if this overheated the international political scene with an “absolute no chance” of a US-UK deal coming from American democratic speaker, markets were left untouched by this type of declarations that just few months ago would had bring volatility and concerns. 

In response to the FED change of the target inflation, Lagarde replied as expected that is ECB does not target other currencies. The real answer probably comes from Philippe Lane, ECB chief economist, warning that euro’s appreciation is dampening inflation outlook signalling that further stimulus could come along. 

In the HY segment market players remain cautiously bullish regarding supply in the coming weeks. It will be a busy September with, on one side, large LBO’s /acquisitions to be financed like IMA (Industria Macchine Automatiche) by BC Partners or BP’s global petrochemical business by Ineos and, on the other, companies more exposed to Covid effects that need bridge financing.