JEROME POWELL SIGNALED A RATE CUT IS LIKELY IN JULY citing the Fed will “act as appropriate to sustain the expansion” despite global weakness and the ongoing trade spat. “Manufacturing, trade and investment are weak all around the world ... We have agreed to begin (trade) discussions again with China, and that is a constructive step. It doesn’t remove the uncertainty.”  Gold rallied 1.33 percent following Powell’s dovish remarks and the major indices finished near all-time highs. The 10-year note dipped 0.3 basis points.  S&P +0.45%, DOW +0.29, NASDAQ +0.77%

THE FED IS CONCERNED slowing global economies will hinder the US economy pointing to a reduction in business investment within the manufacturing industry.  “Economic momentum appears to have slowed in some major foreign economies, and that weakness could affect the U.S. economy.” Mortgage applications fell 2.4 percent week-over-week despite rates hovering near two-year lows, “Borrowers have been less sensitive to low rates.” ADI proprietary index data showed a net yield increment for high-yield versus high-grade bonds. High-grade edged out high-yield.  Among high-grade bonds showing topmost price gains at appreciable volumes traded, Buckeye Partners LP (USD) 3.95% 12/1/2026 made analysts' 'Conviction Buy' lists. (See the chart for Buckeye Partners LP bonds below.) Corey Mahoney (cmahoney@advantagedata.com).

 

Key Gainers and Losers	Volume Leaders
+   EQT Corp. 3.9% 10/1/2027 + 0.1%   Kinder Morgan Inc. 5.55% 6/1/2045 + 1.3% -   Health Care REIT Inc. 4% 6/1/2025 -0.0%	Quest Diagnostics Inc.   4.25% 4/1/2024 Kinder Morgan Inc.   5.55% 6/1/2045

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing 0.03% -0.15% 0.57% 2.91% 6.48% 5.19% Mining -0.13% -0.30% 1.90% 3.49% 9.32% 8.62% Construction -0.02% -0.29% 1.35% 4.09% 7.83% 8.22% Manufacturing -0.14% -0.35% 1.48% 3.67% 7.59% 7.31% Transportion, Communication, Electric/Gas -0.17% -0.44% 1.79% 4.61% 9.73% 9.98% Wholesale -0.16% -0.32% 1.13% 3.62% 7.92% 7.91% Retail -0.19% -0.39% 1.75% 3.91% 8.24% 8.50% Finance, Insurance, Real-Estate -0.12% -0.31% 0.85% 2.88% 6.46% 7.53% Services -0.15% -0.46% 1.30% 3.71% 7.56% 8.27% Public Administration -0.09% -0.25% -0.04% 1.77% 2.99% 4.58% Energy -0.17% -0.39% 1.89% 3.57% 9.69% 9.11%   Total returns (non-annualized) by rating, market weighted.

New Issues	New Issues [Continued]
1. FS KKR Capital Corp. (USD) 4.625% 7/15/2024 (07/09/2019):400MM Senior Unsecured Notes, Price at Issuance 99.52, Yielding 4.73%. 2. Sumitomo Mitsui Fin Grp Inc. (USD) 3.04% 7/16/2029 (07/09/2019):2500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.04%.

NEW ISSUANCE WATCH: on 7/10/19 participants welcome a $1250MM new corporate-bond offering by Royal Bank of Canada.  The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 6/21/19, with a net outflow of $602MM, year-to-date $8.9B flowed into high-yield. 

 

Top Widening Credit Default Swaps (CDS)	Top Narrowing Credit Default Swaps (CDS)
Hertz Corp. (5Y Sen USD MR14) Hovnanian Enterprises Inc. (5Y Sen USD XR14)	SuperValu Inc. (5Y Sen USD MR14) Atmos Energy Corp. (5Y Sen USD MR14)

Loans and Credit Market Overview

SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity:

• Heritage Power, LLC, Piaggio & C. SpA, Goshawk Aviation Ltd, Valence Surface Technologies

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 10 bp (basis points), as of 07/10/19
• Net positive capital flows into high-yield ETFs & mutual funds

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