BOSTON FED RESERVE CHAIRMAN ERIC ROSENGREN stated he sees “no clarion call” to increase interest rates any time soon emphasizing “the Fed can afford to wait and see.”  Unemployment is hovering at 50-year lows, In April the jobless rate was 3.6 percent.  Treasury yields ticked higher after a report the US eased trade restrictions on Chinese telecom giant Huawei Technologies.  The 10-year note gained 1.2 basis points. S&P +0.84%, DOW +0.72%, NASDAQ +1.05%.

U.S. EXISTING HOME SALES continued to soften in April despite a sound economy and falling mortgage rates.  The housing market “underperforming in relation to economic performance, with job creation and [lower] mortgage rates”.  The privatization of mortgage titans Freddie Mac and Fannie Mae could take upwards of four to five years and an estimated $75 billion apiece.  Chief executive Donald Layton of Freddie Mac simply stated “It is not clear how this is going to work.  ADI proprietary index data showed a net yield increment for high-yield versus high-grade bonds. High-yield edged out high-grade. Among high-yield bonds showing topmost price gains at appreciable volumes traded, Range Resources Corp. (USD) 4.875% 5/15/2025 made analysts' 'Conviction Buy' lists. (See the chart for ADI indexes above.) Corey Mahoney (cmahoney@advantagedata.com).

 

Key Gainers and Losers	Volume Leaders
+   Honeywell Intl. Inc. 1.4% 10/30/2019 + 0.0%   Canadian Natural Resources LTD 4.95% 6/1/2047 + 0.5% -   Citigroup Inc. VAR% 1/10/2028 -0.1%	CVS Health Corp.   5.05% 3/25/2048 HSBC Hldg PLC   FLT% 5/18/2024

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing -0.28% -0.58% 0.21% 2.52% 5.01% 4.96% Mining -0.18% -0.01% 0.16% 2.74% 6.31% 6.87% Construction -0.14% -0.08% 0.85% 2.63% 4.18% 6.16% Manufacturing -0.16% -0.02% 0.57% 2.42% 4.66% 6.01% Transportion, Communication, Electric/Gas -0.19% -0.03% 0.63% 3.30% 5.94% 8.27% Wholesale -0.15% -0.10% 0.78% 2.64% 5.11% 6.29% Retail -0.17% -0.08% 0.55% 2.44% 4.87% 6.48% Finance, Insurance, Real-Estate -0.10% -0.05% 0.67% 2.31% 4.39% 6.34% Services -0.18% 0.03% 0.68% 2.41% 4.64% 6.90% Public Administration -0.00% -0.07% 0.63% 1.41% 1.84% 4.25% Energy -0.19% 0.00% 0.24% 2.81% 6.35% 8.62%   Total returns (non-annualized) by rating, market weighted.

New Issues	New Issues [Continued]
1. Bank of America NA (USD) FLT% 5/24/2021 (05/20/2019):1750MM Senior Unsecured Notes, Price at Issuance 100. 2. Wells Fargo Bank NA (USD) FLT% 5/27/2022 (05/20/2019):1000MM Senior Unsecured Notes, Price at Issuance 100.

NEW ISSUANCE WATCH: on 5/21/19 participants welcome a $1000M new corporate-bond offering by Vodafone Group PLC. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 5/17/19, with a net outflow of $2.6B, year-to-date $11.0B 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) San Miguel Corp. (5Y Sen USD CR14)

Loans and Credit Market Overview

SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity:

• Southern California Edison Co., Horizon Pharma Inc., Berry Plastics 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 16 bp (basis points), as of 05/21/19
• Net positive capital flows into high-yield ETFs & mutual funds

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