U.S. TREASURY YIELDS PLUMMETED upon the European Central Bank announcing a shift in economic policy holding rates steady and slashing its GDP forecast. Jobless claims slightly declined last week by 3.000 jobs for a seasonally adjusted 223,000 jobs. The 10-year U.S. Treasury note dipped 5 basis points and the 30-year note sank 4 basis points. S&P -0.81%, Dow -0.78%, NASDAQ -1.13%
CONSUMER BORROWING INCREASED IN JANUARY, according to a report from the Federal Reserve consumer debt rose by $17 billion, seasonally adjusted $4.03 trillion. Former chief economist from Wells Fargo is not concerned with the uptick of consumer debt stating, consumer credit remains “ok for now”however, “When the economy slows down and jobs start drying up, that’s when you’ll see who is over their skis”. On a positive note, U.S. productivity improved in the fourth quarter to 1.9 percent for the fourth quarter of 2018. Increased productivity directly corresponds to sound business investment growth signaling companies are allocating capital in strategic areas boosting efficiency. ADI proprietary index data showed a net yield increment for high-yield versus high-grade bonds. High-grade edged out high-yield. Among high-grade bonds showing topmost price gains at appreciable volumes traded, Bank of America Corp. (USD) 11% 1/13/2031 made analysts' 'Conviction Buy' lists. (See the chart for Bank of America Corp. below) . Corey Mahoney (cmahoney@
|Key Gainers and Losers||Volume Leaders|
|Dell Intl LLC 4% 7/15/2024 144A
Anheuser-Busch Co. Inc. 4.7% 2/1/2036 144A
|Industry Returns Tracker|
|New Issues||New Issues [Continued]|
1. Dell Intl. LLC Emc Corp. (USD) 4.9% 10/1/2026 Reg S (03/06/2019): 1750MM First Lien Notes, Price at Issuance 99.743, Yielding 4.94%.
2. Marriott International Inc. (USD) FLT% 3/8/2021 (03/06/2019):300MM Senior Unsecured Notes, Price at Issuance 100.
Quest Diagnostics Inc. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 2/22/19, with a net inflow of $0.69B, year-to-date $9.7B flowed into high-yield.
|Top Widening Credit Default Swaps (CDS)||Top Narrowing Credit Default Swaps (CDS)|
|Hertz Corp. (5Y Sen USD XR14)
Hovnanian Enterprises Inc. (5Y Sen USD MR14)
|Cable & Wireless Communication (5Y Sen USD CR14)
SuperValu Inc. (5Y Sen USD MR14)
Loans and Credit Market Overview
Deals recently freed for secondary trading, notable secondary activity:
- Wynn Resorts LTD., Xylem Inc., Amer Sports Corp., Orchid Orthopedic Solutions, Neustar Inc
Long-term bond yields are expected to hit a cyclical peak in 2019 given tight fiscal policy and lagging global economies. Europe remains checked by stubbornly low inflationary forces. Positive effects remained in force:
- TED spread held below 15 bp (basis points), as of 03/07/19
- Net positive capital flows into high-yield ETFs & mutual funds
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