INVESTMENT GRADE BONDS ROSE AGAINST HIGH YIELDING DEBT in net prices linked to actual trades. The 10-year note lost 6.4 basis points settling at its lowest since October 2017. Equities settled lower and gave up gains following the threat of a trade war escalation with China. S&P -0.85%, DOW-0.93%, NASDAQ -0.39%.
CONSUMER CONFIDENCE HITS A SIX-MONTH HIGH IN MAY climbing to 134.1 revealing how resilient the labor market continues to be.
“Consumers expect the economy to continue growing at a solid pace in the short-term, and despite weak retail sales in April”. Home price growth further slowed in March falling to a
growth rate of 3.7 percent and existing home sales are down 4.4 percent from the previous month. David Blitzer, managing director at S&P Dow Jones Indices stated
, “Given the broader economic picture, housing should be doing better.” Barclays is betting on bundling home loans assembling a team of 144 bankers and traders re-entering the
risky market in order to amplify revenues. 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,
Abbvie Inc. (USD) 4.5% 5/14/2035 made analysts' 'Conviction Buy' lists. (See the chart for
ADI indexes above.)
Corey Mahoney (
cmahoney@advantagedata.com).
| Key Gainers and Losers |
Volume Leaders |
| + |
L Brands Inc. 5.25% 2/1/2028 |
+ 0.8% |
| |
Petrobras Global Finance BV 7.375% 1/17/2027 |
+ 0.0% |
| - |
General Motors Finl Co. Inc. 3.5% 7/10/2019 |
-0.6% |
|
Itron Inc. 5% 1/15/2026 144A
Weatherford Intl LTD 5.125% 9/15/2020
|
| Industry Returns Tracker |
| Industry |
Past Day |
Past Week |
Past Month |
Past Quarter |
YTD |
Past Year |
| Agriculture, Forestry, Fishing |
-0.14% |
0.23% |
-0.68% |
2.45% |
5.80% |
7.37% |
| Mining |
0.08% |
-1.04% |
-2.40% |
0.04% |
7.16% |
1.45% |
| Construction |
-0.01% |
-0.15% |
-0.25% |
3.39% |
7.90% |
6.30% |
| Manufacturing |
0.06% |
-0.19% |
-0.64% |
2.02% |
7.16% |
5.94% |
| Transportion, Communication, Electric/Gas |
0.01% |
-0.06% |
-0.30% |
2.96% |
7.37% |
6.74% |
| Wholesale |
0.03% |
-0.09% |
-0.10% |
2.71% |
8.18% |
5.88% |
| Retail |
0.03% |
-0.25% |
0.18% |
3.45% |
9.66% |
8.33% |
| Finance, Insurance, Real-Estate |
-0.01% |
-0.06% |
-0.18% |
2.39% |
7.75% |
6.92% |
| Services |
0.02% |
-0.09% |
-0.15% |
2.08% |
7.73% |
7.22% |
| Public Administration |
0.12% |
0.43% |
1.05% |
3.51% |
7.41% |
13.86% |
| Energy |
0.05% |
-0.88% |
-2.19% |
0.51% |
7.24% |
1.29% |
| |
| Total returns (non-annualized) by rating, market weighted. |
|
| New Issues |
Forward Calendar |
|
1. Kruger Packaging Hldg LP (CAD) 6% 6/1/2026 (05/28/2019):125MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6%.
2. Kruger Packaging Hldg LP (CAD) 6% 6/1/2026 144A (05/28/2019):125MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6%.
|
1. Nexstar Media Group Inc.: Possible new bonds, Expected Q3 2019
2. Harsco Corp.: Unsecured Debt, Expected Q3 2019
|
Additional Commentary
NEW ISSUANCE WATCH: on 5/28/19 participants welcome a $125MM new corporate-bond offering by Kruger Packaging Hldg LP. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 5/24/19, with a net inflow of $4MM, year-to-date $11.0B flowed into high-yield.
| Top Widening Credit Default Swaps (CDS) |
Top Narrowing Credit Default Swaps (CDS) |
Rite Aid Corp. (5Y Sen USD XR14)
Hertz Corp. (5Y Sen USD CR14) |
Road King Infrastructure LTD (5Y Sen USD MR14)
Cable & Wireless Communication (5Y Sen USD CR14) |
Loans and Credit Market Overview
SYNDICATED LOANS HIGHLIGHTS:
Deals recently freed for secondary trading, notable secondary activity:
- Service Corp. Intl., Lucid Energy Group LLC, Southern California Edison Co.
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 16 bp (basis points), as of 05/28/19
- Net positive capital flows into high-yield ETFs & mutual funds
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