NEW YORK (Reuters) – An index of credit default swaps on junk-rated companies fell on Thursday, according to data from IHS Markit, in a sign of risk aversion.
Markit’s North American High-Yield CDX Index – which tracks the cost to insure high-yield corporate debt and is a proxy for the junk market – fell to 106.37%, its lowest since Nov. 2020.
BlackRock’s iShares iBoxx Investment Grade Corporate Bond ETF – a major exchange-traded fund tracking the U.S. investment-grade corporate bond market – fell 0.76% to $126.77, its lowest since May 2020.
U.S. stocks fell on Thursday, with the Nasdaq diving more than 2%, as Facebook-owner Meta Platforms’ dour forecast threatened to upend a nascent recovery on Wall Street.
Adding to investor jitters were a second rate hike by the Bank of England and a statement by European Central Bank’s President Christine Lagarde that any decision to raise rates would be “data-dependent”, moving away from her long-standing insistence that the ECB was “very unlikely” to hike rates this year.
The spread on the iTraxx European Crossover index, which measures the cost of insuring exposure to a basket of sub-investment-grade European companies, jumped to 249.98 bps, the highest since November 2020.
The spread surged during the European Central Bank’s policy meeting press conference, where Lagarde chose not to repeat her past comment that a 2022 rate hike was very unlikely. It was last up 13 bps, set for the biggest daily jump this year.
(Reporting by Alden Bentley and Yoruk Bahceli; Writing by by Davide Barbuscia; Editing by David Gregorio)
