U.S. MANUFACTURING CONTRACTED IN AUGUST falling below the pivotal reading of 50 indicating contraction within the manufacturing sector. “(The ISM data) was confirmation that manufacturing has been in a decline since reaching a peak a year ago,” Pavlik added. “It’s not a great sign, not the kind of sign you want to see in a slowing economy.” Weakening global economies and trade tensions are starting to show effects on the US economy. The 10-year note dipped 2.7 basis points. S&P -0.64%, DOW-1.02, NASDAQ -1.01%.
SECOND QUARTER GDP ROSE AT AN ANNUAL RATE 2 PERCENT reporting slower growth than the previous quarter as corporate profits rebound. “Whatever the numbers show for any individual quarter, we have to expect a weaker trend in corporate earnings growth in the next year.” ADI proprietary index data showed a net yield increment for high-grade versus high-yield bonds. High-grade edged out high-yield. Among high-grade bonds showing topmost price gains at appreciable volumes traded, McDonald's Corp. (USD) 3.625% 5/1/2043 made analysts' 'Conviction Buy' list (See the chart below for ADI bonds above.) Corey Mahoney
| Key Gainers and Losers |
Volume Leaders |
| + |
Enbridge Inc. 5.5% 7/15/2077 |
+ 0.8% |
| |
Hess Corp. 4.3% 4/1/2027 |
+ 0.5% |
| - |
Teva Pharmaceutical Industries LTD 2.2% 7/21/2021 |
-0.4% |
|
Goldman Sachs Group Inc. 5% PERP
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 |
0.35% |
0.54% |
1.06% |
6.99% |
13.26% |
15.23% |
| Mining |
-0.04% |
0.04% |
-2.47% |
-2.52% |
5.48% |
0.10% |
| Construction |
-0.04% |
0.40% |
1.41% |
5.02% |
13.37% |
10.32% |
| Manufacturing |
0.05% |
0.34% |
0.85% |
3.20% |
10.36% |
7.37% |
| Transportion, Communication, Electric/Gas |
-0.04% |
0.27% |
0.91% |
4.44% |
12.79% |
9.35% |
| Wholesale |
0.03% |
0.30% |
0.06% |
2.77% |
11.52% |
7.17% |
| Retail |
0.00% |
0.29% |
0.22% |
3.33% |
13.63% |
9.99% |
| Finance, Insurance, Real-Estate |
-0.01% |
0.24% |
0.84% |
4.21% |
12.01% |
9.99% |
| Services |
-0.04% |
0.37% |
0.94% |
3.68% |
11.47% |
8.83% |
| Public Administration |
0.12% |
0.22% |
1.64% |
5.69% |
13.05% |
17.35% |
| Energy |
-0.05% |
-0.01% |
-1.74% |
-1.74% |
6.50% |
1.02% |
| |
| Total returns (non-annualized) by rating, market weighted. |
|
| New Issues |
Forward Calendar |
|
(None Current 09/03/2019)
|
1. DDM Holding AG: ¬100MM, Expected Q3 2019
2. General Electric Distributed Power: $600M high-yield bonds, Expected Q3 2019
|
Additional Commentary
NEW ISSUANCE WATCH: on 09/03/19 participants welcome a $500M new corporate-bond offering by
Deere & Co. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 8/16/19, with a net outflow of $4.07B.
| 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) |
SuperValu Inc. (5Y Sen USD MR14)
San Miguel Corp. (5Y Sen USD CR14) |
Loans and Credit Market Overview
SYNDICATED LOANS HIGHLIGHTS:
Deals recently freed for secondary trading, notable secondary activity:
- Electronic Arts Inc., AutoData, PaySimple Inc., Nike Inc., US Foods Inc., Duerre Group
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 was 15 bp (basis points), as of 09/03/19
- Net positive capital flows into high-yield ETFs & mutual funds
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