Morgan Stanley on Thursday made it five banks out of five to beat expectations in the current earnings season.

The bank's adjusted earnings per share came in at 45 cents, just ahead of the consensus estimate of 43 cents. Revenues rose faster than expenses, and all of the bank's various businesses increased their profits.

Wealth management, which is increasingly important to the bank following its purchase of Smith Barney in its entirety, saw its revenue rise 9% to $3.53bn on a margin of 18.5%.

Morgan Stanley's CDS spreads tightened 8bps to 139bps, a sizeable daily move for this credit. Goldman Sachs, Bank of America, Citigroup and JPMorgan - all of which have posted similarly strong results - also rallied.

The market as a whole was grinding tighter as we enter what will probably be the summer lull. Ben Bernanke's testimony to Congress yesterday was well-received, even though it didn't really say anything different from previous statements.

The Fed Chairman appears before Congress again today, and unless he says something unexpected then spreads should finish the day tighter. The Markit CDX.NA.IG was 2bps tighter at 74bps, and has now rallied 23.5bps since June 24, when QE tapering fears were at their height.

It was a similar story in Europe, where the Markit iTraxx Europe was almost 2.5bps tighter at 102.5bps. High-beta names, including banks and mining credits, outperformed.

In the high-yield world, Nokia was in focus after it posted second-quarter results. From a credit perspective, the figures were something of a mixed bag, and this was reflected in the company's spreads widening just 2bps to 555bps.

On the negative side, total unit shipments of 61m were lower than expectations, leading to a 24% drop in revenues compared to last year.

But credit investors took note of the better than expected net cash position and strong profitability in the networks division. It was Nokia's move to take total control of the latter that led to its spreads rallying a few weeks ago. However, the drop in phone sales raises the question of whether Nokia should exit its core business.

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