PRODUCER PRICES ROSE IN AUGUST edging 0.1 percent higher supporting the market's expectation the Federal Reserve will cut interest rates next week. Gold closed above $1,500 for the first time since early August as the White House sparked fear, “Federal Reserve should get our interest rates down to ZERO, or less”. The 10-year note rose 0.1 basis points. S&P +0.72%, DOW +0.84, NASDAQ +1.06%.
INVESTORS PULLED $4.4 BILLION from mutual and exchange-traded funds that hold U.S. stocks during the week ended September 6. Last week marked the fourth out of five weeks of outflows amid concerns over a trade war. In addition, many investment banks are predicting the U.S. will enter a recession within the next 12 months. Year to date investors have pulled a staggering $98 billion from U.S. stock funds a clear indication of shifting strategies mitigating risk. ADI proprietary index data showed a net yield increment for high-grade versus high-yield bonds. High-yield edged out high-grade. Among high-yield bonds showing topmost price gains at appreciable volumes traded, Pacific Gas & Electric Co. (USD) 3.3% 12/1/2027 made analysts' 'Conviction Buy' list (See the chart below for Pacific Gas & Electric Co bonds below) Corey Mahoney
| Key Gainers and Losers |
Volume Leaders |
| + |
Teva Pharmaceutical Industries LTD 2.8% 7/21/2023 |
+ 2.0% |
| |
Frontier Communications Corp. 10.5% 9/15/2022 |
+ 0.9% |
| - |
TransDigm Inc. 6.375% 6/15/2026 |
-0.3% |
|
Whiting Petroleum Corp. 6.625% 1/15/2026
Pacific Gas & Electric Co. 6.05% 3/1/2034 |
| Industry Returns Tracker |
| Industry |
Past Day |
Past Week |
Past Month |
Past Quarter |
YTD |
Past Year |
| Agriculture, Forestry, Fishing |
-0.33% |
0.47% |
1.54% |
6.48% |
14.02% |
16.25% |
| Mining |
0.44% |
1.14% |
1.73% |
-1.31% |
6.25% |
1.05% |
| Construction |
-0.03% |
0.20% |
1.55% |
4.17% |
13.31% |
10.16% |
| Manufacturing |
-0.05% |
0.14% |
1.17% |
2.48% |
10.62% |
7.71% |
| Transportion, Communication, Electric/Gas |
-0.10% |
0.27% |
1.05% |
3.58% |
12.95% |
9.91% |
| Wholesale |
0.02% |
0.19% |
0.92% |
2.60% |
11.76% |
7.89% |
| Retail |
-0.03% |
0.48% |
1.20% |
2.53% |
13.89% |
10.46% |
| Finance, Insurance, Real-Estate |
-0.08% |
0.26% |
1.24% |
3.73% |
12.49% |
10.50% |
| Services |
-0.06% |
0.33% |
1.46% |
3.16% |
11.60% |
9.03% |
| Public Administration |
0.02% |
-0.07% |
1.03% |
4.51% |
12.81% |
16.76% |
| Energy |
0.34% |
0.98% |
1.94% |
-0.57% |
7.37% |
1.87% |
| |
| Total returns (non-annualized) by rating, market weighted. |
|
| New Issues |
Forward Calendar |
|
1. Brookfield Residential Properties Inc. (USD) 6.25% 9/15/2027 144A (09/10/2019): 600MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.25%.
2. Sensata Technologies BV (USD) 4.375% 2/15/2030 144A (09/10/2019): 450MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.38%.
|
1. Twinset Spa: ¬170M 5 year senior secured floating-rate notes, Expected Q3 2019
2. Calpine Corp.: $1.4B bonds, Expected Q3 2019
|
Additional Commentary
NEW ISSUANCE WATCH: on 09/10/19 participants welcome a $525M new corporate-bond offering by
Triumph Group Inc .
The most recent data showed a significant flow into fixed income ETFs for the month of August, with a net inflow of $14.0 billion.
| Top Widening Credit Default Swaps (CDS) |
Top Narrowing Credit Default Swaps (CDS) |
Weatherford International LTD (5Y Sen USD XR14)
Hertz Corp. (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:
- Beazer Homes USA Inc., Murphy Oil USA Inc., Electronic Arts Inc., AutoData
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 20 bp (basis points), as of 09/11/19
- Net positive capital flows into high-yield ETFs & mutual funds
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