INVESTMENT GRADE DEBT EDGED HIGHER as investors flee to safe-haven assets predicting the Fed will cut interest rates. BlackRock anticipates the Fed to cut rates “over the next few months” by 25-50 basis points following a weak employment report and continued trade tensions. Gold rose for the eighth straight session. The 10-year note sank 3.5 basis points. S&P +1.19%, DOW +1.16, NASDAQ +1.74%.
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U.S. JOBS REPORT DISAPPOINTS ADDING A DISMAL 75,000 JOBS in May, falling short of expectations. The report is another signal the
economy is cooling and might prompt the
Fed to cut rates. Martha Gimbel an economist stated,
“While one might expect slower jobs growth at this point in the economic cycle, coming in the context of tariffs and other economic headwinds makes this number more worrisome”. May’s gains registered as the
104th straight month of a growing labor force. The labor force has been
resilient through the trade war with china up until now.
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,
Anheuser-Busch Inbev Worldwide Inc. (USD) 4.439% 10/6/2048 made analysts' 'Conviction Buy' lists. (See the chart for
Anheuser-Busch Inbev Worldwide Inc. bonds.)
Corey Mahoney (
cmahoney@advantagedata.com).
| Key Gainers and Losers |
Volume Leaders |
| + |
Halfmoon Parent Inc. 4.9% 12/15/2048 144A |
+ 1.2% |
| |
Verizon Communications Inc. 3.376% 2/15/2025 |
+ 0.2% |
| - |
Cisco Systems Inc. 2.45% 6/15/2020 |
-0.2% |
|
Halfmoon Parent Inc. 4.9% 12/15/2048 144A
Verizon Communications Inc. 3.376% 2/15/2025
|
| Industry Returns Tracker |
| Industry |
Past Day |
Past Week |
Past Month |
Past Quarter |
YTD |
Past Year |
| Agriculture, Forestry, Fishing |
0.02% |
0.49% |
1.66% |
4.13% |
6.86% |
5.07% |
| Mining |
-0.02% |
0.12% |
0.78% |
3.38% |
6.97% |
7.07% |
| Construction |
-0.02% |
0.48% |
1.59% |
4.32% |
6.27% |
6.79% |
| Manufacturing |
-0.00% |
0.49% |
1.36% |
3.73% |
5.82% |
6.54% |
| Transportion, Communication, Electric/Gas |
0.02% |
0.35% |
1.58% |
4.76% |
7.38% |
9.38% |
| Wholesale |
-0.00% |
0.28% |
1.20% |
3.59% |
6.74% |
6.92% |
| Retail |
-0.03% |
0.41% |
1.33% |
3.69% |
5.97% |
6.72% |
| Finance, Insurance, Real-Estate |
-0.05% |
0.40% |
1.29% |
3.20% |
5.38% |
6.95% |
| Services |
0.05% |
0.54% |
1.72% |
3.85% |
6.08% |
7.64% |
| Public Administration |
-0.15% |
0.39% |
1.14% |
2.28% |
2.71% |
4.96% |
| Energy |
-0.01% |
0.07% |
0.82% |
3.51% |
7.24% |
9.12% |
| |
| Total returns (non-annualized) by rating, market weighted. |
|
| New Issues |
New Issues [Continued] |
|
1. Apollo Management Holdings LP (USD) 4.872% 2/15/2029 (06/06/2019): 125MM Senior Unsecured Notes, Price at Issuance 104.812, Yielding 4.26%.
2. Canadian Western Bank (CAD) 3.668% 6/11/2029 (06/06/2019):250MM Subordinated Notes, Price at Issuance 100, Yielding 3.67%.
|
|
Additional Commentary
NEW ISSUANCE WATCH: on 6/6/19 participants welcome a $125MM new corporate-bond offering by Apollo Management Holdings LP. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 5/31/19, with a net outflow of $1.3B, year-to-date $9.8B 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) |
Cable & Wireless Communication (5Y Sen USD CR14)
SuperValu Inc. (5Y Sen USD MR14) |
Loans and Credit Market Overview
SYNDICATED LOANS HIGHLIGHTS:
Deals recently freed for secondary trading, notable secondary activity:
- Packers Holdings, Charles Schwab Corp., Tundra Energy Marketing , Louis Dreyfus Corp.
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 15 bp (basis points), as of 06/07/19
- Net positive capital flows into high-yield ETFs & mutual funds
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