PRODUCER PRICES ROSE IN AUGUST edging 0.1 percent higher supporting the market's expectation the Federal Reserve will cut interest rates next week. Gold closed above $1,500 for the first time since early August as the White House sparked fear, “Federal Reserve should get our interest rates down to ZERO, or less”. The 10-year note rose 0.1 basis points. S&P +0.72%, DOW +0.84, NASDAQ +1.06%.

INVESTORS PULLED $4.4 BILLION from mutual and exchange-traded funds that hold U.S. stocks during the week ended September 6. Last week marked the fourth out of five weeks of outflows amid concerns over a trade war. In addition, many investment banks are predicting the U.S. will enter a recession within the next 12 months. Year to date investors have pulled a staggering $98 billion from U.S. stock funds a clear indication of shifting strategies mitigating risk. ADI proprietary index data showed a net yield increment for high-grade versus high-yield bonds. High-yield edged out high-grade. Among high-yield bonds showing topmost price gains at appreciable volumes traded,  Pacific Gas & Electric Co. (USD) 3.3% 12/1/2027 made analysts' 'Conviction Buy' list (See the chart above for ADI bonds above) Corey Mahoney

 

Key Gainers and Losers	Volume Leaders
+   Energy Transfer Partners LP 6.25% 4/15/2049 + 0.1%   Phillips 66 4.875% 11/15/2044 + 0.4% -   Altria Group Inc. 4.4% 2/14/2026 -0.2%	Kraft Heinz Co.   4.375% 6/1/2046 (2) Altria Group Inc.   4.4% 2/14/2026

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing -0.17% -0.78% 0.26% 1.62% 9.50% 9.55% Mining -0.43% -0.94% 0.61% 4.08% 11.61% 10.72% Construction -0.47% -1.12% 0.20% 4.05% 9.58% 9.71% Manufacturing -0.44% -1.08% 0.67% 4.44% 10.52% 10.22% Transportion, Communication, Electric/Gas -0.56% -1.48% 0.59% 5.50% 13.18% 13.31% Wholesale -0.42% -0.91% 0.83% 3.82% 11.36% 10.11% Retail -0.44% -1.19% 0.78% 5.01% 11.25% 11.06% Finance, Insurance, Real-Estate -0.32% -0.74% 0.50% 3.07% 8.64% 9.11% Services -0.45% -1.13% 0.70% 4.20% 9.96% 10.37% Public Administration -0.13% -0.35% 0.45% 1.59% 4.52% 5.90% Energy -0.41% -0.98% 0.58% 4.07% 11.82% 12.09%   Total returns (non-annualized) by rating, market weighted.

New Issues	New Issues [Continued]
1. Lloyds Banking Group PLC (USD) 2.858% 3/17/2023 (09/10/2019): 1500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.86%. 2. Penske Truck Leasing (USD) 3.35% 11/1/2029 144A (09/10/2019): 300MM Senior Unsecured Notes, Price at Issuance 99.554, Yielding 3.4%.

NEW ISSUANCE WATCH: on 09/11/19 participants welcome a $200M new corporate-bond offering by Texas Health Resources. The most recent data showed a significant flow into fixed income ETFs for the month of August, with a net inflow of $14.0 billion.

 

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:

• Beazer Homes USA Inc, Murphy Oil USA Inc., Electronic Arts Inc., AutoData, PaySimple Inc.

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 20 bp (basis points), as of 09/11/19
• Net positive capital flows into high-yield ETFs & mutual funds

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