RISK-ON SENTIMENT INTENSIFIED FOLLOWING A SLEW OF POSITIVE EARNINGS as the Dow Jones Industrial Average spiked 230 points. J.P. Morgan and Disney were among the companies that reported on Friday, J.P. Morgan announced the “impact of higher rates” elevated earnings, JPM closed 4.5 percent higher. Disney surged 11 percent after revealing a rival streaming service to Netflix. Economic concerns have dissipated, “Strength in [JPMorgan’s] consumer franchise shows that despite the uncertainty in the fourth quarter of last year, consumers continue to spend and give strength to the overall U.S. economy”. 10-year Treasury note rose 6.4 basis points. S&P +0.64%, DOW +0.96%, NASDAQ +0.44%.
U.S. TREASURY YIELDS SETTLED HIGHER upon favorable global economic data and an
uptick of exports from China. “Treasuries are on their back foot to close out the week, an
unsurprising development given stronger-than-expected data out of both China…and the Eurozone,” Jon Hill, an interest-rate strategist at BMO Capital Markets. The U.S. Justice Department
slapped GE with a $1.5 billion fine since they
concealed the skimpy quality of loans when packaging them into residential mortgage-backed securities.
ADI proprietary index data showed a net
yield increment for high-yield versus high-grade bonds.
High-yield edged out high-grade. Among high-yield bonds showing topmost price gains at appreciable volumes traded,
Pacific Gas & Electric Co. (USD) 4.3% 3/15/2045 made analysts' 'Conviction Buy' lists. (See the chart for
ADI indices above.)
Corey Mahoney cmahoney@advantagedata.com).
NEW ISSUANCE WATCH: on 4/11/19 participants welcome a $750MM new corporate-bond offering by
Avolon Holdings LTD. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 4/5/19, with a net inflow of $2.0B, year-to-date $12.0B flowed into high-yield.
Loans and Credit Market Overview
SYNDICATED LOANS HIGHLIGHTS:
Deals recently freed for secondary trading, notable secondary activity:
- Six Flags Inc., MW Industries Inc., Ultimate Software Group, Crossamerica Partners LP
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 18 bp (basis points), as of 04/12/19
- Net positive capital flows into high-yield ETFs & mutual funds
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