Risks Mount If Yields Rise as Activity Falls (Capital Markets Research)

WEEKLY MARKET OUTLOOKMAY 14, 2015CAPITAL MARKETS RESEARCHMoodys Analytics markets and distributes all Moodys Capital Markets Research, Inc. materials. Moodys Capital Markets Research, Inc is a subsidiary of Moodys Corporation. Moodys Analytics does not provide investment advisory services or products. For further detail, please see the last page.Risks Mount If Yields Rise as Activity Falls Credit Markets Review and Outlook by John Lonski Risks Mount If Yields Rise as Activity Falls. ¯ FULL STORY PAGE 2Topic of the Week by Ben Garber The Wrong Way One-Way Euro Bond Bet.¯ FULL STORY PAGE 4The Week Ahead We preview economic reports and forecasts from the US, UK/Europe, and Asia/Pacific regions. ¯ FULL STORY PAGE 7 The Long View Check our chart here for forecast summaries of key credit market metrics. Full updated stories, Since the 10-year Treasury yield bottomed on April 3, the composite speculative grade bond yield fell by -8 bp (to 6.16%), while the long-term Baa industrial company bond yield increased by 54 bp (to 4.95%), begin on page 16.¯ FULL STORY PAGE 16Ratings Round-Up by Njundu Sanneh Upgrades Outnumber Downgrades.¯ FULL STORY PAGE 19Market Data Credit spreads, CDS movers, issuance.¯ FULL STORY PAGE 21Moodys Capital Markets Research recent publications Links to commentaries on: Monsanto, Toyota, Genworth, Ally, bank risk, Jamaica, AXA, corp credit, Kroger, Ocwen, Pfizer, production, Greece, TXN, HNT. ¯ FULL STORY PAGE 25Credit Spreads Investment Grade: Year-end 2015 spread to be under its recent 131 bp.High Yield: Recent spread of 452 bp could dip to 445 bp by year-end 2015.Defaults US HY default rate: April 2015, 1.7%; 2.9% average in 1Q/2016Issuance For 2015, US$ IG bond offerings may grow by 6% to $1.19 trillion, while US$ HY bond issuance edges up by 1% to $424 billion. In 2014, US$ IG bond issuance rose by 0.9% to $1.129 trillion, while US$ HY bond issuance dropped by -2.3% to $421 billion.Click here for Moodys Credit Outlook, our sister publication containing Moodys rating agency analysis of recent news events, summaries of recent rating changes, and summaries of recent research.Moodys Capital Markets Research, Inc.Weekly Market Outlook Contributors: David W. Munves, CFA 1.212.553.2844 david.munves@moodys.com John Lonski 1.212.553.7144 john.lonski@moodys.com Ben Garber 1.212.553.4732 benjamin.garber@moodys.com Njundu Sanneh 1.212.553.4036 njundu.sanneh@moodys.com Yukyung Choi 1.212.553.0906 yukyung.choi@moodys.com Irina Baron 1.212.553.4307 irina.baron@moodys.com Franklin Kim 1.212.553.4419 franklin.kim@moodys.com Xian (Peter) Li1.212.553.1404 Xian.li@moodys.comMoody's Analytics/Europe: Zach Witton 44 (20) 7772-1678 Zach.witton@moodys.comMoody's Analytics/Asia-Pacific: Alaistair Chan 1.612.9270.8148 Alaistair.Chan@moodys.com Emily Dabbs 1.612.9270.8159 Emily.dabb...