Investment Grade Bond Research - August 26, 2019

U.S. DURABLE GOODS ORDERS JUMPED 2.1 PERCENT IN JULY strengthened by gains in the transportation sector due to an increase of aircraft orders from Boeing.  Excluding the transportation sector, durable goods slipped 0.4 percent. June’s results were revised significantly lower to 0.9 percent down from 1.5 percent. S&P +1.10%, DOW +1.05, NASDAQ +1.32%.

THE 10-YEAR NOTE HELD STEADY AT 1.537 PERCENT recovering from an early morning dip deepening the inversion between the two-and ten year notes to 1.7 basis points. Trade concerns have sent the markets whipsawing escalading investors’ fears resulting in volatility. Boeing bonds traded notably higher following the release durable goods were held up by aircraft sales.  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, Pitney Bowes Inc. (USD) 4.625% 3/15/2024 made analysts' 'Conviction Buy' list. (See the chart above for ADI Indices) Corey Mahoney

 

Key Gainers and Losers	Volume Leaders
+   Wal-Mart Stores Inc. FLT% 6/23/2020 + 0.0%   Express Scripts Holding Co. 3% 7/15/2023 + 0.9% -   Oracle Corp. 1.9% 9/15/2021 -0.0%   Comcast Corp. 4.7% 10/15/2048 -0.5%	Oracle Corp.   1.9% 9/15/2021 Synchrony Financial   3.95% 12/1/2027

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing 0.20% -0.15% 1.12% 2.95% 9.70% 9.44% Mining 0.42% 0.27% 2.86% 5.64% 12.56% 10.81% Construction 0.26% -0.09% 2.88% 5.86% 10.59% 9.84% Manufacturing 0.34% 0.23% 3.21% 6.50% 11.28% 9.93% Transportion, Communication, Electric/Gas 0.41% 0.18% 4.22% 7.99% 14.62% 13.77% Wholesale 0.28% 0.24% 2.32% 5.17% 11.77% 10.06% Retail 0.46% 0.39% 3.79% 7.24% 12.72% 11.54% Finance, Insurance, Real-Estate 0.25% 0.12% 2.28% 4.50% 9.39% 9.34% Services 0.34% 0.22% 3.45% 6.53% 11.57% 10.90% Public Administration 0.19% 0.04% 1.51% 2.59% 4.88% 5.99% Energy 0.36% 0.29% 2.87% 5.73% 12.89% 12.24%   Total returns (non-annualized) by rating, market weighted.

New Issues	New Issues [Continued]
1. Texas Instruments Inc. (USD) 2.25% 9/4/2029 (08/26/2019):750MM Senior Unsecured Notes, Price at Issuance 99.689, Yielding 2.28%. 2. Canadian Imperial Bank of Commerce (CAD) 2.35% 8/28/2024 (08/26/2019): 1500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.35%.

NEW ISSUANCE WATCH: on 08/26/19 participants welcome a $750M new corporate-bond offering by
Texas Instruments Inc. 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 $4.07 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)	SuperValu Inc. (5Y Sen USD XR14) San Miguel Corp. (5Y Sen USD CR14)

Loans and Credit Market Overview

SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity:

• PaySimple Inc., Nike Inc., US Foods Inc., Duerre Group, Albertsons LLC, Helical PLC

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 19 bp (basis points), as of 08/26/19
• Net positive capital flows into high-yield ETFs & mutual funds

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