EQUITIES ROSE ON FRIDAY following the nation’s largest banks passing the Federal Reserve’s stress tests. Meanwhile, investors are keeping a watchful eye on the G20 summit in Japan awaiting news of progress toward a resolution to the trade spat. “What investors expect are good talks, no implementation of tariffs right away and a continuation in negotiations.” The 10-year note dipped 1.7 basis points. S&P +0.32%, DOW +0.19, NASDAQ +0.24%.
CONSUMER SPENDING GREW AT A HEALTHY RATE in May indicating the economy remains strong despite a dip in the consumer sentiment report earlier this week. April spending was revised higher to 0.6 percent from 0.3 percent but if inflationary pressures persist the Fed might react. “Below-target inflation is a concern for the Fed, but not the primary reason they are leaning toward cutting interest rates.” A-component Apple of the FAANG group announced plans to shift some manufacturing to China from the US in spite of volatile trade tensions. 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, NiSource Finance Corp. (USD) 5.8% 2/1/2042 made analysts' 'Conviction Buy' lists. (See the chart for ADI Indexes above.) Corey Mahoney (cmahoney@advantagedata.com).
| Key Gainers and Losers |
Volume Leaders |
| + |
Western Digital Corp. 4.75% 2/15/2026 |
+ 2.2% |
| |
Frontier Communications Corp. 11% 9/15/2025 |
+ 1.8% |
| - |
Pacific Gas & Electric Co. 6.05% 3/1/2034 |
-0.7% |
|
EMC Corp. 2.65% 6/1/2020
Chesapeake Energy Corp. 8% 1/15/2025
|
| Industry Returns Tracker |
| Industry |
Past Day |
Past Week |
Past Month |
Past Quarter |
YTD |
Past Year |
| Agriculture, Forestry, Fishing |
0.09% |
0.29% |
5.63% |
4.38% |
12.44% |
14.44% |
| Mining |
-0.07% |
0.31% |
0.29% |
0.42% |
8.49% |
3.41% |
| Construction |
-0.17% |
-0.27% |
2.13% |
3.85% |
10.25% |
7.97% |
| Manufacturing |
0.03% |
-0.10% |
1.57% |
2.23% |
8.86% |
6.80% |
| Transportion, Communication, Electric/Gas |
0.02% |
-0.25% |
2.45% |
3.90% |
10.09% |
9.17% |
| Wholesale |
-0.02% |
-0.06% |
2.22% |
3.45% |
10.47% |
7.46% |
| Retail |
0.03% |
-0.20% |
1.69% |
4.13% |
11.30% |
8.92% |
| Finance, Insurance, Real-Estate |
0.03% |
-0.16% |
1.96% |
3.15% |
9.98% |
9.14% |
| Services |
-0.07% |
-0.37% |
1.63% |
3.02% |
9.48% |
8.37% |
| Public Administration |
-0.08% |
0.23% |
1.87% |
3.70% |
9.49% |
13.66% |
| Energy |
-0.01% |
0.26% |
0.17% |
0.34% |
8.22% |
2.94% |
| |
| Total returns (non-annualized) by rating, market weighted. |
|
| New Issues |
Forward Calendar |
|
1. Allied Universal Holdco LLC (USD) 9.75% 7/15/2027 144A (06/27/2019): 1050MM Senior Unsecured Notes, Price at Issuance 98.641, Yielding 10%.
2. Watford Hldg LTD. (USD) 6.5% 7/2/2029 144A (06/27/2019):175MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.5%.
|
1. Hexion Inc. : $450MM, Week of 6/24
2. Twinset Spa: ¬170M 5 year senior secured floating-rate notes, Expected Q2 2019
|
Additional Commentary
NEW ISSUANCE WATCH: on 6/28/19 participants welcome a $300MM new corporate-bond offering by Granite Merger Sub 2, Inc. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 6/21/19, with a net outflow of $602MM, year-to-date $8.9B flowed into high-yield.
| Top Widening Credit Default Swaps (CDS) |
Top Narrowing Credit Default Swaps (CDS) |
Hovnanian Enterprises Inc. (5Y Sen USD XR14)
Controladora Mabe SA de CV (5Y Sen USD CR14) |
Cable & Wireless Communication (5Y Sen USD CR14)
SuperValu Inc. (5Y Sen USD MR14) |
Loans and Credit Market Overview
SYNDICATED LOANS HIGHLIGHTS:
Deals recently freed for secondary trading, notable secondary activity:
- Valence Surface Technologies, Moneygram Intl. Inc., Vici Properties LLC, Vidrala SA
OVERALL CREDIT MARKET: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 19 bp (basis points), as of 06/28/19
- Net positive capital flows into high-yield ETFs & mutual funds
Copyright 2019 Advantage Data Inc. All Rights Reserved. http://www.advantagedata.com
Information in this document should not be regarded as an offer to sell or solicitation of an offer to buy bonds or any financial instruments referred to herein. All information provided in this document is believed to be accurate. However, Advantage Data and its sources make no warranties, either express or implied, as to any matter whatsoever, including but not limited to warranties of merchantability or fitness for a particular purpose. Opinions in this document are subject to change without notice. Electronic redistribution, photocopying and any other electronic or mechanical reproduction is strictly prohibited without prior written permission from Advantage Data Inc.
.png)
