A spectacular momentum crash unfolded since late August, caused by the bounce back in sovereign bond yields. Within equity markets, value stocks experienced an impressive rebound while momentum stocks fell strikingly.

Despite colossal headwinds related to trade tensions, the Brexit deadlock and the manufacturing recession, asset prices have been incredibly buoyant so far this year. Equities are recovering from the August drawdown and are approaching late-July record levels.

M&A patterns are also showing healthy dynamics. A healthy number of hostile deals (usually riskier but more profitable) tends to concentrate on smaller targets. Jumbo deals are increasingly funded by stock and cash combinations, also favorable for arbitrageurs.

According to our estimates, CTA and Global Macro strategies have so far extended their winning streak in July. While we recently talked about the reasons for the outperformance of CTAs (+9.3% year-to-date), the performance of Global Macro strategies is a bit more ambiguous, due to the elevated dispersion between strategies.

With only about 12% of the distressed debt maturing within the next two years, liquidity pressure is likely to remain benign. Meanwhile, the number of issuers seeking a maturity extension, amendments or waivers to their financial covenants remain tame.