INVESTMENT-GRADE BONDS EDGED OUT HIGH-YIELD DEBT as bond investors scaled back risk upon the market digesting the Feds dovish tone following yesterday’s conference. Data points to an expanding economy for the first time in five months aided by “a rebound in stock prices” and “accommodative financial conditions”. A Moody’s Analyst indicated expectations need to be reasonable for 2019, “The U.S. economy enjoyed a banner year in 2018, juiced up by massive deficit-financed tax cuts for individuals and businesses and increases in government spending,”. The 10-year U.S. Treasury note sank 8 basis point. S&P +1.09%, Dow +0.87%, NASDAQ +1.42%
| Key Gainers and Losers | Volume Leaders | |||||||||
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General Electric Capital Corp. 4.375% 9/16/2020 |
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| New Issues | New Issues [Continued] |
|---|---|
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1. Nutrien LTD (USD) 4.2% 4/1/2029 (03/20/2019): 750MM Senior Unsecured Notes, Price at Issuance 99.677, Yielding 4.24%. |
Additional Commentary
Toyota Credit Canada Inc. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 3/15/19, with a net inflow of $1.0B, year-to-date $8.2B 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
Deals recently freed for secondary trading, notable secondary activity:
- HotelBeds, Nine West Holdings Inc., TruGreen LP, PetVet Care Centers LLC, XPO Logistics Inc.
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 03/21/19
- Net positive capital flows into high-yield ETFs & mutual funds
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