U.S. TRADE GAP SHRANK IN JULY as exports rebound causing the deficit to decline by 2.7 percent. Industrial supplies lead the drop in imports falling by 7.4 percent month over month. “The ongoing trade war between the world’s largest economies has hurt China perhaps more than the U.S. but a few signs of a slowdown have now emerged in the U.S. too.” The 10-year note lost 0.4 basis points. S&P+0.84%, DOW +0.68, NASDAQ +1.09%.
CRUDE OIL SURGES 4.38 PERCENT as analysts forecast a reduction in U.S. supplies following uplifting economic data reporting China’s service sector expanded at a faster than anticipated. In the U.S. supplies declined for the third straight week. “Oil prices however remain focused on the trade war and the longer we don’t see a date scheduled for a face-to-face meeting between Chinese and U.S.” 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, Florida Power & Light (USD) 5.125% 6/1/2041 made analysts' 'Conviction Buy' list (See the chart below for ADI bonds above.) Corey Mahoney
| Key Gainers and Losers |
Volume Leaders |
| + |
Petrobras Global Finance BV 7.375% 1/17/2027 |
+ 0.4% |
| |
JC Penney Co. Inc. 7.625% 3/1/2097 |
+ 8.4% |
| - |
Sprint Capital Corp. 8.75% 3/15/2032 |
-0.1% |
|
Sprint Capital Corp. 8.75% 3/15/2032
Whiting Petroleum Corp. 6.25% 4/1/2023 144A
|
| Industry Returns Tracker |
| Industry |
Past Day |
Past Week |
Past Month |
Past Quarter |
YTD |
Past Year |
| Agriculture, Forestry, Fishing |
-0.07% |
0.38% |
1.11% |
6.97% |
12.69% |
14.29% |
| Mining |
-0.57% |
-0.60% |
-2.79% |
-2.43% |
4.79% |
-0.59% |
| Construction |
-0.21% |
0.08% |
1.29% |
5.17% |
13.83% |
10.14% |
| Manufacturing |
-0.14% |
0.03% |
0.85% |
3.38% |
10.26% |
7.25% |
| Transportion, Communication, Electric/Gas |
-0.16% |
-0.04% |
0.90% |
4.44% |
12.91% |
9.63% |
| Wholesale |
-0.15% |
0.20% |
0.33% |
3.49% |
11.30% |
7.07% |
| Retail |
-0.18% |
0.16% |
0.64% |
3.74% |
13.98% |
10.47% |
| Finance, Insurance, Real-Estate |
-0.11% |
0.02% |
0.71% |
4.36% |
11.93% |
9.68% |
| Services |
-0.15% |
0.05% |
0.84% |
3.87% |
11.28% |
8.64% |
| Public Administration |
-0.18% |
0.03% |
0.83% |
5.37% |
12.90% |
17.37% |
| Energy |
-0.53% |
-0.69% |
-2.19% |
-1.78% |
5.80% |
0.35% |
| |
| Total returns (non-annualized) by rating, market weighted. |
|
| New Issues |
Forward Calendar |
|
(None Current 09/04/2019)
|
1. General Electric Distributed Power: $600M high-yield bonds, Expected Q3 2019
2. Diamondback Energy Inc.: High-yield notes, 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) |
Weatherford International LTD (5Y Sen USD XR14)
Hertz Corp. (5Y Sen USD XR14) |
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:
- 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 18 bp (basis points), as of 09/04/19
- Net positive capital flows into high-yield ETFs & mutual funds
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