INVESTMENT GRADE BONDS ROSE AGAINST ITS HIGH YIELDING COUNTERPARTS in net prices linked to actual trades. The U.S. adds a dismal 130,000 jobs in August, the smallest increase in three months falling short of ADP’s report of nearly 200,000 jobs. The 10-year note lost 0.2 basis points. S&P+0.23%, DOW +0.39, NASDAQ +0.10%.

THE FEDERAL RESERVE QUEUES UP another rate drop this year expected to occur at the next policy meeting September 18^th. Fed President Jerome Powell once again assured the Fed will “continue to act appropriately to sustain this expansion” and a recession will not happen. The economy is signaling a different story based on an inverted Treasury yield curve and the ISM manufacturing index dipping below 50. Additionally, Powell stated, “Sometimes things are relatively clear, other times it’s murky out there”, stated Powell. “I think it’s one of those times.”  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,  General Motors Co. (USD) 5% 10/1/2028  made analysts' 'Conviction Buy' list. (See the chart above for General Motors Co. bonds below) Corey Mahoney

 

Key Gainers and Losers	Volume Leaders
+   Anheuser-Busch Inbev Worldwide Inc. 5.55% 1/23/2049 + 0.7%   Altria Group Inc. 5.8% 2/14/2039 + 0.9% -   Marriott Intl Inc. 2.3% 1/15/2022 -0.2%	HSBC Hldg PLC   3.4% 3/8/2021 JPMorgan Chase & Co.   3.702% 5/6/2030

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing -0.31% 0.26% 0.57% 2.44% 10.14% 9.94% Mining -0.36% -0.24% 1.36% 4.84% 12.13% 11.12% Construction -0.45% -0.31% 0.82% 4.92% 10.45% 10.23% Manufacturing -0.47% -0.34% 1.45% 5.20% 10.95% 10.35% Transportion, Communication, Electric/Gas -0.60% -0.54% 1.79% 6.79% 14.42% 14.50% Wholesale -0.38% -0.06% 1.32% 4.64% 12.02% 10.66% Retail -0.59% -0.45% 1.76% 6.18% 12.55% 12.24% Finance, Insurance, Real-Estate -0.36% -0.13% 1.00% 3.49% 9.04% 9.41% Services -0.52% -0.38% 1.62% 5.00% 10.89% 11.16% Public Administration -0.28% -0.00% 0.61% 1.66% 4.74% 5.97% Energy -0.39% -0.27% 1.31% 4.96% 12.46% 12.64%   Total returns (non-annualized) by rating, market weighted.

New Issues	New Issues [Continued]
1. Georgia Power Co. (USD) 2.65% 9/15/2029 (09/05/2019): 350MM Senior Unsecured Notes, Price at Issuance 99.877, Yielding 2.66%. 2. Yum! Brands Inc. (USD) 4.75% 1/15/2030 144A (09/05/2019):800MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.75%.

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 XR14)

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 held below 15 bp (basis points), as of 09/06/19
• Net positive capital flows into high-yield ETFs & mutual funds

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