U.S. MANUFACTURING CONTRACTED IN AUGUST falling below the pivotal reading of 50 indicating contraction within the manufacturing sector. “(The ISM data) was confirmation that manufacturing has been in a decline since reaching a peak a year ago,” Pavlik added. “It’s not a great sign, not the kind of sign you want to see in a slowing economy.” Weakening global economies and trade tensions are starting to show effects on the US economy. The 10-year note dipped 2.7 basis points. S&P -0.64%, DOW -1.02, NASDAQ -1.01%.

SECOND QUARTER GDP ROSE AT AN ANNUAL RATE 2 PERCENT reporting slower growth than the previous quarter as corporate profits rebound. “Whatever the numbers show for any individual quarter, we have to expect a weaker trend in corporate earnings growth in the next year.” ADI proprietary index data showed a net yield increment for high-grade versus high-yield bonds. High-grade edged out high-yield. Among high-grade bonds showing topmost price gains at appreciable volumes traded, McDonald's Corp. (USD) 3.625% 5/1/2043  made analysts' 'Conviction Buy' list. (See the chart below for McDonald's Corp. bonds below.) Corey Mahoney

 

Key Gainers and Losers	Volume Leaders
+   CVS Health Corp. 3.7% 3/9/2023 + 0.3%   HSBC USA Inc. 2.75% 8/7/2020 + 0.1% -   Comcast Corp. 4.7% 10/15/2048 -0.2%	Comcast Corp.   4.7% 10/15/2048 Credit Agricole London   2.75% 6/10/2020 Reg S

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing 0.32% 0.44% 1.68% 2.89% 10.21% 9.91% Mining -0.08% -0.12% 2.69% 5.36% 12.50% 10.94% Construction 0.00% 0.27% 2.94% 5.68% 11.49% 10.79% Manufacturing -0.01% 0.03% 3.09% 6.09% 11.11% 10.12% Transportion, Communication, Electric/Gas -0.02% 0.14% 4.15% 7.68% 14.98% 13.88% Wholesale 0.00% 0.12% 2.48% 5.05% 11.16% 10.42% Retail -0.04% -0.07% 3.62% 6.92% 12.57% 11.87% Finance, Insurance, Real-Estate 0.02% 0.04% 2.26% 4.31% 9.40% 9.52% Services 0.01% 0.03% 3.27% 5.78% 11.07% 10.89% Public Administration 0.08% -0.06% 1.44% 2.35% 4.82% 6.09% Energy -0.06% -0.11% 2.75% 5.45% 12.87% 11.09%   Total returns (non-annualized) by rating, market weighted.

New Issues	New Issues [Continued]
1. PPL Electric Utilities Corp. (USD) 3% 10/1/2049 (09/03/2019):400MM Secured Notes, Price at Issuance 98.321, Yielding 3.09%. 2. Deere & Co. (USD) 2.875% 9/7/2049 (09/03/2019): 500MM Senior Unsecured Notes, Price at Issuance 99.96, Yielding 2.88%.

NEW ISSUANCE WATCH: on 09/03/19 participants welcome a $500M new corporate-bond offering by
Deere & Co. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 8/16/19, with a net outflow of $4.07 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:

• Electronic Arts Inc., AutoData, PaySimple Inc., Nike Inc., US Foods Inc., Duerre Group

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 was 15 bp (basis points), as of 09/03/19
• Net positive capital flows into high-yield ETFs & mutual funds

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