EQUITIES ROSE ON FRIDAY following the nation’s largest banks passing the Federal Reserve’s stress tests. Meanwhile, investors are keeping a watchful eye on the G20 summit in Japan awaiting news of progress toward a resolution to the trade spat. “What investors expect are good talks, no implementation of tariffs right away and a continuation in negotiations.” The 10-year note dipped 1.7 basis points. S&P +0.32%, DOW +0.19, NASDAQ +0.24%.
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CONSUMER SPENDING GREW AT A HEALTHY RATE in May indicating
the economy remains strong despite a dip in the consumer sentiment report earlier this week.
April spending was revised higher to 0.6 percent from 0.3 percent but if inflationary pressures persist the Fed might react.
“Below-target inflation is a concern for the Fed, but not the primary reason they are leaning toward cutting interest rates.” A-component
Apple of the FAANG group announced plans to
shift some manufacturing to China from the US in spite of
volatile trade tensions.
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,
NiSource Finance Corp. (USD) 5.8% 2/1/2042 made analysts' 'Conviction Buy' lists. (See the chart for
NiSource Finance Corp. below.)
Corey Mahoney (
cmahoney@advantagedata.com).
| Key Gainers and Losers |
Volume Leaders |
| + |
CVS Health Corp. 5.05% 3/25/2048 |
+ 0.6% |
| |
Kraft Foods Inc. 3.5% 6/6/2022 |
+ 0.0% |
| - |
General Electric Co. FLT% PERP (1) |
-2.1% |
|
Bank of America Corp. VAR% 2/7/2030
Citigroup Inc. 3.98% 3/20/2030
|
| Industry Returns Tracker |
| Industry |
Past Day |
Past Week |
Past Month |
Past Quarter |
YTD |
Past Year |
| Agriculture, Forestry, Fishing |
-0.01% |
0.04% |
2.50% |
3.34% |
8.41% |
5.26% |
| Mining |
0.14% |
0.36% |
2.46% |
3.23% |
9.07% |
8.98% |
| Construction |
0.17% |
0.35% |
2.51% |
3.15% |
7.38% |
7.90% |
| Manufacturing |
0.16% |
0.11% |
2.56% |
3.37% |
7.49% |
7.63% |
| Transportion, Communication, Electric/Gas |
0.26% |
0.24% |
3.21% |
4.40% |
9.77% |
10.56% |
| Wholesale |
0.12% |
0.02% |
1.96% |
3.09% |
8.08% |
7.99% |
| Retail |
0.18% |
0.12% |
2.92% |
3.52% |
8.18% |
8.72% |
| Finance, Insurance, Real-Estate |
0.11% |
0.06% |
1.84% |
2.75% |
6.44% |
7.67% |
| Services |
0.15% |
0.11% |
2.74% |
3.50% |
7.69% |
8.88% |
| Public Administration |
0.09% |
0.04% |
1.13% |
1.75% |
3.24% |
4.75% |
| Energy |
0.22% |
0.40% |
2.48% |
3.26% |
9.40% |
9.67% |
| |
| Total returns (non-annualized) by rating, market weighted. |
|
| New Issues |
New Issues [Continued] |
|
1. Royal Bank of Canada (CAD) 2.352% 7/2/2024 (06/27/2019):2000MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.35%.
2. HAT Hldg I LLC Hat Hldg II LLC (USD) 5.25% 7/15/2024 144A (06/27/2019): 350MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.25%.
|
|
Additional Commentary
NEW ISSUANCE WATCH: on 6/27/19 participants welcome a $800MM new corporate-bond offering by Telus 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) |
Hertz Corp. (5Y Sen USD XR14)
Hovnanian Enterprises Inc. (5Y Sen USD MR14) |
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:
- Valence Surface Technologies, Moneygram Intl. Inc., Vici Properties LLC, Vidrala SAdd
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 19 bp (basis points), as of 06/28/19
- Net positive capital flows into high-yield ETFs & mutual funds
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