INVESTMENT GRADE DEBT ROSE AGAINST JUNK BONDS in net prices linked to actual trades as a risk-off sentiment continues. Crude oil spiked following two tankers being attacked near the Strait of Hormuz threatening the global supply, delivery of July crude shot up more than 4 percent before settling up 2.09 percent. Director of research at GraniteShares stated, “The nature of these events is that the outcomes are quite binary: either a major supply disruption event transpires or it does not.” The 10-year note lost 2.0 basis points. S&P +0.15%, DOW +0.15, NASDAQ +0.34%.

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THE NUMBER OF AMERICANS FILING UNEMPLOYMENT APPLICATIONS increased last week to a five-week high rising by 3,000 claims.  Despite the modest climb in jobless claims, the labor market remains robust and unemployment maintains its near historic 50-year lows.  Trade war flare-ups and the lack of skilled labor have hindered the economy causing anxiety and a slowdown for hiring in the retail, construction and manufacturing sectors. 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, Public Service Electric And Gas Company (USD) 5.7% 12/1/2036 made analysts' 'Conviction Buy' lists. (See the chart for Public Service Electric And Gas Company bonds below.) Corey Mahoney (cmahoney@advantagedata.com).

 

Key Gainers and Losers	Volume Leaders
+   General Mills Inc. 4.2% 4/17/2028 + 0.4%   Abbvie Inc. 2.5% 5/14/2020 + 0.0% -   GE Capital Intl. Funding Co. 4.418% 11/15/2035 -0.3%	Microsoft Corp.   2.4% 8/8/2026 AT&T Inc.   FLT% 7/15/2021

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing 0.23% 0.43% 1.44% 4.30% 7.34% 5.20% Mining -0.04% 0.18% 1.17% 3.37% 7.28% 7.61% Construction 0.08% 0.18% 1.93% 3.84% 6.18% 7.29% Manufacturing 0.02% 0.17% 1.59% 3.51% 6.06% 6.69% Transportion, Communication, Electric/Gas 0.04% 0.22% 1.75% 4.36% 7.62% 9.43% Wholesale -0.04% 0.18% 1.34% 3.55% 7.00% 7.12% Retail 0.06% 0.11% 1.60% 3.42% 6.22% 6.86% Finance, Insurance, Real-Estate 0.05% 0.03% 1.29% 2.93% 5.48% 7.04% Services 0.03% 0.18% 1.82% 3.51% 6.10% 7.61% Public Administration 0.12% -0.07% 1.15% 2.19% 2.96% 4.89% Energy -0.03% 0.15% 1.16% 3.36% 7.56% 9.40%   Total returns (non-annualized) by rating, market weighted.

New Issues	New Issues [Continued]
1. Met Life Global Funding Inc. (USD) 3.05% 6/17/2029 Reg S (06/12/2019): 500MM Secured Notes, Price at Issuance 99.914, Yielding 3.06%. 2. NXP BV (USD) 3.875% 6/18/2026 Reg S (06/12/2019): 750MM Senior Unsecured Notes, Price at Issuance 99.964, Yielding 3.88%.

NEW ISSUANCE WATCH: on 6/13/19 participants welcome a $150MM new corporate-bond offering by John Deere Financial LTD. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 6/7/19, with a net outflow of $3.2B, year-to-date $6.6B flowed into high-yield.

 

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 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:

• Perforce Software Inc., Avantor Performance Materials Inc., United PF Holdings LLC

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 22 bp (basis points), as of 06/13/19
• Net positive capital flows into high-yield ETFs & mutual funds

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