THE FEDERAL RESERVE HOLDS THE CURRENT INTEREST RATES but suggests a rate cut on the horizon if the economy slows down. The Federal Reserve Chairman, Jerome Powell indicated they “will act as appropriate to sustain the expansion” going on 10-years and refrained from mentioning the word “patient”. Treasury yields dipped following the Feds announcement, the 10-year note fell 2.1 basis points. S&P +0.41%, DOW +0.29, NASDAQ +0.40%.

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US CONSUMER DEBT EXCEEDS LEVELS SEEN DURING THE FINANCIAL CRISIS OF 2008.  Analysts estimate in the first quarter of 2019 the total consumer debt hit $14 trillion. Student debt has ballooned over the past ten-years surpassing $1.486 trillion, more than doubling since 2008. The Fed’s dot plot revealed a shift in the Open Market Committee’s mindset as nine members expect the rate to near 2.1 percent by the end of 2020, contrary to 2.6 percent during the last update. “It appears that about half of the committee is starting to panic about the risks posed by trade tensions, while the other half wants to remain ‘patient’. 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, Johnson Controls Inc. (USD) 5.25% 12/1/2041 made analysts' 'Conviction Buy' lists. (See the chart for Johnson Controls Inc. bonds below.) Corey Mahoney (cmahoney@advantagedata.com).

Key Gainers and Losers	Volume Leaders
+   CVS Health Corp. 4.78% 3/25/2038 + 0.1%   GE Capital Intl. Funding Co. 4.418% 11/15/2035 + 0.1% -   Costco Wholesale Corp. 2.3% 5/18/2022 -0.1%	Vodafone Group PLC   4.375% 5/30/2028 CVS Health Corp.   4.78% 3/25/2038

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing 0.20% 0.62% 2.33% 4.41% 7.88% 5.16% Mining 0.19% 0.29% 1.26% 3.55% 7.62% 7.54% Construction 0.17% 0.51% 2.00% 3.88% 6.34% 7.11% Manufacturing 0.20% 0.47% 1.78% 3.79% 6.43% 6.98% Transportion, Communication, Electric/Gas 0.29% 0.62% 2.16% 4.92% 8.18% 9.82% Wholesale 0.09% 0.19% 1.40% 3.77% 7.31% 7.32% Retail 0.27% 0.61% 1.92% 3.94% 6.94% 7.34% Finance, Insurance, Real-Estate 0.12% 0.34% 1.40% 3.17% 5.83% 7.27% Services 0.20% 0.53% 2.00% 3.93% 6.69% 8.03% Public Administration -0.11% 0.12% 0.98% 2.07% 2.88% 4.74% Energy 0.23% 0.32% 1.31% 3.64% 7.89% 9.56%   Total returns (non-annualized) by rating, market weighted.

New Issues	New Issues [Continued]
1. Hyundai Capital America (USD) 3.4% 6/20/2024 Reg S (06/18/2019): 400MM Senior Unsecured Notes, Price at Issuance 99.995, Yielding 3.4%. 2. Sodexo (GBP) 1.75% 6/26/2028 (06/18/2019): 250MM Senior Unsecured Notes.

NEW ISSUANCE WATCH: on 6/19/19 participants welcome a $1750MM new corporate-bond offering by Toronto-Dominion Bank. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 6/14/19, with a net outflow of $1.7B, year-to-date $8.3B flowed into high-yield.

 

Top Widening Credit Default Swaps (CDS)	Top Narrowing Credit Default Swaps (CDS)
Hertz Corp. (5Y Sen USD XR14) Hovnanian Enterprises Inc. (5Y Sen USD MR14)	San Miguel Corp. (5Y Sen USD CR14) Atmos Energy Corp. (5Y Sen USD MR14)

Loans and Credit Market Overview

SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity:

• Hilton Worldwide Finance LLC, US Renal Care Inc., Perforce Software Inc.

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 06/19/19
• Net positive capital flows into high-yield ETFs & mutual funds

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