Investment Grade Bond Research - June 14, 2019

STOCKS INITIALLY FELL ON FRIDAY following weak industrial growth from China surprising investors reporting a 17-year low. “The China data certainly is far-reaching, impacting not only China but global markets as well.” Investors will keep a keen eye on the Feds meeting next week speculating on a rate cut. The 10-year note lost 0.1 basis points. Equities recovered in the afternoon from China's disappointing data, S&P +0.03%, DOW +0.14, NASDAQ -0.28%.

Click Here for a Free Trial to Advantage Data Charting

STRONG RETAIL SALES drove the economy higher as sales rose 0.5 percent in May reassuring investors the economy is on solid ground.  Consumer spending accounts for more than two-thirds of the economy, in addition, the service sector represents 88 percent of GDP.  “All the indications continue to be really strong in terms of unemployment, customer confidence”.  US industrial production bounced back in May rising 0.4 percent. 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, Xerox Corp. (USD) 4.8% 3/1/2035 made analysts' 'Conviction Buy' lists. (See the chart for Xerox Corp. bonds below.) Corey Mahoney (cmahoney@advantagedata.com).

 

Key Gainers and Losers	Volume Leaders
+   GE Capital Intl. Funding Co. 4.418% 11/15/2035 + 0.2%   US Bancorp 2.35% 1/29/2021 + 0.0% -   Cisco Systems Inc. 2.2% 2/28/2021 -0.1%	Verizon Communications Inc.   4.125% 3/16/2027 Cisco Systems Inc.   2.2% 2/28/2021

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing 0.27% 0.65% 1.83% 4.55% 7.59% 5.22% Mining 0.12% 0.29% 1.16% 3.32% 7.30% 7.50% Construction 0.09% 0.29% 2.03% 4.18% 6.20% 7.77% Manufacturing 0.13% 0.33% 1.64% 3.65% 6.18% 6.82% Transportion, Communication, Electric/Gas 0.14% 0.36% 1.90% 4.66% 7.89% 9.66% Wholesale 0.02% 0.30% 1.28% 3.58% 7.16% 7.38% Retail 0.14% 0.34% 1.58% 3.59% 6.36% 7.04% Finance, Insurance, Real-Estate 0.10% 0.19% 1.25% 3.02% 5.52% 7.12% Services 0.15% 0.32% 1.88% 3.72% 6.34% 7.85% Public Administration 0.11% 0.21% 1.02% 2.31% 3.02% 4.96% Energy 0.09% 0.28% 1.24% 3.43% 7.56% 9.53%   Total returns (non-annualized) by rating, market weighted.

New Issues	New Issues [Continued]
1. Canadian Imperial Bank of Commerce (CAD) 2.95% 6/19/2029 (06/13/2019): 1500MM Subordinated Notes, Price at Issuance 99.995, Yielding 2.95%. 2. Fengate Central Health, LP (CAD) 3.365% 2/28/2051 (06/13/2019):69MM Secured Notes, Price at Issuance 100, Yielding 3.37%.

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)
Hertz Corp. (5Y Sen USD MR14) Hertz Corp. (5Y Sen USD XR14)	SuperValu Inc. (5Y Sen USD MR14) San Miguel Corp. (5Y Sen USD CR14)

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 24 bp (basis points), as of 06/14/19
• Net positive capital flows into high-yield ETFs & mutual funds

Copyright 2019 Advantage Data Inc. All Rights Reserved. http://www.advantagedata.com

Information in this document should not be regarded as an offer to sell or solicitation of an offer to buy bonds or any financial instruments referred to herein. All information provided in this document is believed to be accurate. However, Advantage Data and its sources make no warranties, either express or implied, as to any matter whatsoever, including but not limited to warranties of merchantability or fitness for a particular purpose. Opinions in this document are subject to change without notice. Electronic redistribution, photocopying and any other electronic or mechanical reproduction is strictly prohibited without prior written permission from Advantage Data Inc.