Negative bases could weigh on the new iTraxx after the roll

Some recovery has been seen in the Highest Beta credits last week (-6 bp for € HY , -4 bp for $HY and €AT1s ) . However, on a monthly basis those are still the main underperformers (+45bp for US$ HY, +31bp for AT1s) . CD S -wise, it is worth noticing that t he index roll went pretty smoothly during the first day (20th March), but fears of US recession came back last Friday driving some large buy ers of protection (+8bp for the iTraxx X-Over S43 at the close), while the CDX NA HY also widened substantially during the past week (+17bp) . The presence of large negative bases after the roll on the iTraxx Main S43 might favour buying protection too there . Non-financial senior outperformed once again financials senior : the former s aw its spread tighten by 1.3bp on average while the latter was only tighter by 0.2bp . We maintain our preference for non-financials over banks on the senior side in the current uncertain environment. Sector-wise for the corporate senior market, Autos and Medias have been outperforming (-3 bp vs swap) slightly . But the trend remains very uncertain for cyclicals as shown by the renewed widening seen last Friday, particularly for Auto parts. For instance, spreads of ZF widened back by 20bp last Friday after having compressed roughly by the same amount between Monday and Thursday at the close (see our Credit News on ZF here: Negative earnings as expected and Strategic Responses ).