EQUITIES DRIFTED LOWER following an announcement from Federal Reserve President Jerome Powell stating “my colleagues and I are grappling with is whether these uncertainties will continue to weigh on the outlook and thus call for additional policy accommodation“. Currently Wall Street believes there is a 65.7 percent chance of a 25 basis point cut and a 35.4 percent chance of a 50 basis point cut. The 10-year note fell 2.8 basis points settling below 2 percent. S&P -0.95%, DOW -0.67, NASDAQ -1.51%.
CONSUMER CONFIDENCE SLIPS TO A TWO-YEAR LOW IN JUNE amid rising trade tensions with China revealing a jolt among consumer. Despite the fall in confidence, spending remains strong suggesting short term uncertainty with consumers; the index declined to 121.5 from May’s reading of 131.5. Newly built home sales suddenly dropped 7.8 percent in May despite a deterioration in mortgage rates making home ownership more appealing. Pacific Gas & Electric bondholders propose a bankruptcy exit plan involving an injection worth $30 billion to pay off obligations from the devastating wildfires. Bondholders claim PG&E is taking its time to action a plan and “the need to exit bankruptcy expeditiously is paramount”. 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, American International Group Inc. (USD) 8.175% 5/15/2068 made analysts' 'Conviction Buy' lists. (See the chart for American International Group Inc. bonds below.) Corey Mahoney (cmahoney@
|Key Gainers and Losers||Volume Leaders|
|CVS Health Corp. 5.05% 3/25/2048
Actavis Funding SCS 3.85% 6/15/2024
|Industry Returns Tracker|
|New Issues||New Issues [Continued]|
1. Enterprise Products Operating LLC (USD) 3.125% 7/31/2029 (06/24/2019): 1250MM Senior Unsecured Notes, Price at Issuance 99.955, Yielding 3.13%.
2. Public Service Co. Of New Hampshire (USD) 3.6% 7/1/2049 (06/24/2019): 300MM Secured Notes, Price at Issuance 99.763, Yielding 3.61%.
American Honda Finance Corp. 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)|
|Rite Aid Corp. (5Y Sen USD XR14)
Hertz Corp. (5Y Sen USD CR14)
|SuperValu Inc. (5Y Sen USD MR14)
San Miguel Corp. (5Y Sen USD CR14)
Loans and Credit Market Overview
Deals recently freed for secondary trading, notable secondary activity:
- Vici Properties LLC, Vidrala SA, Hilton Worldwide Finance LLC, US Renal Care Inc.
- TED spread held below 23 bp (basis points), as of 06/25/19
- Net positive capital flows into high-yield ETFs & mutual funds
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