U.S. SERVICES SECTOR REPORTED ACCELERATED ACTIVITY in August as the economy added nearly 200,000 jobs according to ADP. The ISM for non-manufacturing activity index which accounts for two-thirds of U.S. economic output advanced to 56.4 from 53.7. “While we don’t think that the government data will be as strong as the ADP data, the strength in the ADP report eases some concerns about downside risks in the labor market associated with the recent drop in business sentiment.”  The 10-year note spiked by 9.7 basis points. S&P +1.30%, DOW +1.41, NASDAQ +1.75%.

APPLE SOLD $7 BILLION OF BONDS on Thursday with the intent to repurchase common stock and for general corporate purposes. Apple announced earlier this year an increase to its share buyback program by $75 billion and holds more than $200 billion in cash. Treasury yields rose across the board following U.S. and China agreeing to meet in October supporting recent optimism. 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, Enbridge Inc. (USD) 5.5% 7/15/2077  made analysts' 'Conviction Buy' list. (See the chart above for ADI indices) Corey Mahoney

 

Key Gainers and Losers	Volume Leaders
+   Philip Morris Intl. Inc. 2.625% 2/18/2022 + 0.2%   General Electric Co. 2.7% 10/9/2022 + 1.1% -   CVS Health Corp. 5.05% 3/25/2048 -1.4%	General Electric Co.   FLT% PERP (1) Verizon Communications Inc.   5.25% 3/16/2037

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing 0.10% 0.57% 1.42% 2.78% 10.48% 10.11% Mining 0.16% 0.07% 2.09% 5.20% 12.59% 11.44% Construction 0.12% 0.06% 1.85% 5.37% 10.76% 10.01% Manufacturing 0.09% -0.02% 2.37% 5.74% 11.39% 10.65% Transportion, Communication, Electric/Gas 0.07% -0.16% 3.02% 7.21% 14.90% 14.21% Wholesale 0.03% 0.13% 1.90% 4.89% 11.89% 11.03% Retail 0.08% -0.03% 2.79% 6.55% 12.78% 12.37% Finance, Insurance, Real-Estate 0.12% 0.10% 1.81% 4.20% 9.89% 10.13% Services 0.07% -0.03% 2.60% 5.45% 11.59% 11.76% Public Administration 0.12% 0.09% 1.17% 2.06% 4.86% 5.97% Energy 0.17% 0.03% 2.14% 5.32% 12.98% 11.56%   Total returns (non-annualized) by rating, market weighted.

New Issues	New Issues [Continued]
1. Wells Fargo Bank NA (USD) 2.082% 9/9/2022 (09/04/2019):2000MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.08%. 2. Enable Midstream Partners LP (USD) 4.15% 9/15/2029 (09/04/2019): 550MM Senior Unsecured Notes, Price at Issuance 99.821, Yielding 4.17%.

NEW ISSUANCE WATCH: on 09/05/19 participants welcome a $800M new corporate-bond offering by
Yum! Brands Inc. 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)
Rite Aid Corp. (5Y Sen USD XR14) Weatherford International LTD (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:

• Murphy Oil USA Inc., Electronic Arts Inc., AutoData, PaySimple Inc., Nike Inc., US Foods 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 was 17 bp (basis points), as of 09/05/19
• Net positive capital flows into high-yield ETFs & mutual funds