SAFE-HAVEN ASSETS SOARED WHILE EQUITIES TUMBLED ON FRIDAY following the White House announcing tariffs on Mexican goods. The 10-year note plummeted 8.2 basis points, shedding 18 basis points this past week slipping to 20-month lows. JPMorgan predicts there will be two interest rate cuts by the end of the year given the new tariff threats. S&P -1.32%, DOW +1.41, NASDAQ -1.51%.
NEW TARIFFS WILL HINDER THE U.S. AUTO INDUSTRY substantially increasing the cost of cars. On June 10
th the US will implement a 5 percent tariff and gradually raise to it 25 percent by October. US households spent less in April than the previous month however
the economy is still on solid ground, overall data is
“predominantly positive for the economy”. FedEx announced the logistics giant will start to offer Sunday delivery as consumer online shopping habits demand orders sooner. The company intends to rely less on the US post office reducing its outsourcing.
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,
Southern California Edison Company (USD) 6.65% 4/1/2029 made analysts' 'Conviction Buy' lists. (See the chart for
Southern California Edison Company bonds below.)
Corey Mahoney (
cmahoney@advantagedata.com).
| Key Gainers and Losers |
Volume Leaders |
| + |
Verizon Communications Inc. 4.672% 3/15/2055 (1) |
+ 0.2% |
| |
Oracle Corp. 2.5% 5/15/2022 |
+ 0.2% |
| - |
Sherwin Williams Co. 2.25% 5/15/2020 |
-0.0% |
|
Citibank NA 3.05% 5/1/2020
General Motors Co. 5.95% 4/1/2049
|
| Industry Returns Tracker |
| Industry |
Past Day |
Past Week |
Past Month |
Past Quarter |
YTD |
Past Year |
| Agriculture, Forestry, Fishing |
0.18% |
0.35% |
1.18% |
3.98% |
6.26% |
4.99% |
| Mining |
0.12% |
0.16% |
0.40% |
3.54% |
6.83% |
6.09% |
| Construction |
0.15% |
0.38% |
1.12% |
3.94% |
5.33% |
5.40% |
| Manufacturing |
0.08% |
0.27% |
0.79% |
3.35% |
5.22% |
5.46% |
| Transportion, Communication, Electric/Gas |
0.19% |
0.42% |
1.18% |
4.71% |
6.87% |
7.91% |
| Wholesale |
0.08% |
0.15% |
0.83% |
3.32% |
6.00% |
5.87% |
| Retail |
0.09% |
0.23% |
0.87% |
3.45% |
5.44% |
5.86% |
| Finance, Insurance, Real-Estate |
0.08% |
0.21% |
0.84% |
3.02% |
5.05% |
6.18% |
| Services |
0.12% |
0.35% |
1.05% |
3.45% |
5.34% |
6.43% |
| Public Administration |
0.04% |
0.18% |
0.84% |
2.18% |
2.41% |
4.15% |
| Energy |
0.16% |
0.19% |
0.54% |
3.72% |
7.06% |
8.01% |
| |
| Total returns (non-annualized) by rating, market weighted. |
|
| New Issues |
New Issues [Continued] |
|
1. Southern California Gas (USD) 3.95% 2/15/2050 (05/31/2019):350MM Secured Notes, Price at Issuance 99.757, Yielding 3.96%.
2. Bank of New York Mellon, The (USD) 2.783% 6/4/2021 (05/31/2019): 1250MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.78%.
|
|
Additional Commentary
NEW ISSUANCE WATCH: on 5/31/19 participants welcome a $350MM new corporate-bond offering by Southern California Gas. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 5/24/19, with a net outflow of $4MM, year-to-date $11.0B 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) |
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:
- Tundra Energy Marketing , Louis Dreyfus Corp., Service Corp. Intl., Lucid Energy Group LLC
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 05/31/19
- Net positive capital flows into high-yield ETFs & mutual funds
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