Autos and Telcos largely underperforming last week

Hopes of de-escalating trade war , some better than expected macroeconomic numbers from the US (ISM Manufacturing on Thursday, Job Report on Friday) as well as overall good earning season so far (net 18% positive surprises on sales from the more than 350 companies out of the S&P 500 which have reported their Q1-25, net 56% positive in terms of earnings surprise) have led to a good performance of credit markets overall. However, it is worth noticing: i/ a large outperformance of indices vs cash: the iTraxx Main tightened by 1.5bp while the iBoxx Non-Fin senior index widened by almost 6bp over the week, ii/ low beta credits underperformed high beta ones, mainly on the back of repricing by the primary market. For instance, Corp. hybrids outperformed their senior counterparts (+3 bp vs +6 bp vs swap), which is quite unusual when spreads of the latter are widening. Sector-wise, Autos and Telcos underperformed significantly last week with almost 9bp widening of their spreads vs swap (vs 6bp at the index level), while REIT was the only sector for which spreads tightened vs swap (-2.4bp) over the past week. The sector also highlights the best performance over the past month, i.e since reciprocal tariffs have been announced. We keep our OW stance in the sector given its still attractive premium vs other corporates as well as a very low sensitivity to tariff fears. In Telecoms, US operators largely underperformed (see chart on the next page) with more than 10bp widening by T-Mobile, Verizon, AT&T.