European credit spreads tightened on Thursday, tracking a jump in equity markets as the preponderance of corporate earnings met or beat expectations and US data indicated the potential for the economy to recover. By 1050 GMT, the investment-grade Markit iTraxx Europe index was at 142.5 basis points, according to data from Markit, 3.5 basis points tighter versus late on Wednesday.
The Markit iTraxx Crossover index, made up of 45 mostly "junk"-rated credits, was at 827 basis points, 3 basis points tighter, retracing partly from earlier tightening to 816 basis points. The Series 11 Europe index has tightened by around 44 basis points over the weeks since the end of the first trading day for the new on-the-run index in late February, according to Markit data. The Crossover has tightened by more than 105 basis points.
In the cash bond market, the FTSE Euro Corporate Bond Index showed investment-grade corporate bonds in euros yielding an average 219.6 basis points more than similarly dated government bonds, 2.9 basis points less on the day. In underlying government bond markets, the yield on the interest rate sensitive two-year Schatz was 1.354 percent, 3.3 basis points more on the day. The 10-year Bund yielded 3.212 percent, 8.3 basis points more. The 10-year euro swap rate was 3.500 percent.