US INVESTMENT GRADE DEBT ROSE AGAINST JUNK BONDS
in net prices linked to actual trades after the
European Central Bank President
Mario Draghi announced the
possibility of more stimulus if inflation stays low
.
US Treasury prices rallied for the second day as the Fed kicks off its two-day meeting.
The 10-year note dipped 3.2 basis points
. S&P +0.98%,
DOW +1.36,
NASDAQ +1.42%.
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BREXIT IS TAKING ITS TOLL ON INVESTMENT IN BRITISH COMPANIES. Businesses are on track to slash investments by the most in 10 years as the economic future of the country looms. Focus has shifted away from long-term plans given uncertainties,
“Businesses are putting resources into contingency plans, such as stockpiling, rather than investing in ventures that would positively contribute to long-term economic growth”.
FTSE 100 +1.42%,
German DAX +2.19%,
CAC 40
+2.29%,
STOXX Europe 600+1.81%. The
10-year
Gilt lost 4.7 basis points.
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ATTENTION WILL FOCUS ON THE FED’S two-day meeting this week concluding with a monetary policy statement on Wednesday. A recent survey indicated 40 percent of economists polled expect the Fed to ease economic policy next month. Over the past 30 days, the 10-year note fell 45 basis points following tariff uncertainties and slowing economic data. The 10-year note held steady losing 0.4 basis points. Gold slips from 14-month highs, however, continues to see significant inflows as investors flee to the safe-haven asset. S&P +0.16%, DOW +0.15, NASDAQ +0.69%.
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ATTENTION WILL FOCUS ON THE FED’S two-day meeting this week concluding with a
monetary policy statement
on Wednesday. A recent survey indicated 40 percent of economists polled expect
the Fed to ease economic policy next month. Over the past 30 days, the
10-year note fell 45 basis points
following tariff uncertainties and slowing economic data.
The 10-year note held steady losing 0.4 basis points
. Gold
slips from
14-month highs, however,
continues to see significant inflows as
investors flee to the safe-haven asset
.
S&P
+0.16%,
DOW +0.15,
NASDAQ
+0.69%.
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STOCKS INITIALLY FELL ON FRIDAY following weak industrial growth from China surprising investors reporting a 17-year low. “The China data certainly is far-reaching, impacting not only China but global markets as well.” Investors will keep a keen eye on the Feds meeting next week speculating on a rate cut. The 10-year note lost 0.1 basis points. Equities recovered in the afternoon from China's disappointing data, S&P +0.03%, DOW +0.14, NASDAQ -0.28%.
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STOCKS INITIALLY FELL ON FRIDAY following weak industrial growth from China
surprising investors reporting a 17-year low.
“The China data certainly is far-reaching, impacting not only China but global markets as well.” Investors will keep a keen eye on the Feds meeting next week speculating on a rate cut.
The 10-year note lost 0.1 basis points.
Equities recovered in the afternoon from China's disappointing data, S&P +0.03%,
DOW +0.14,
NASDAQ
-0.28%.
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BRITAIN CLAIMS THE GOVERNMENT IS IN “PRETTY GOOD SHAPE”
in the event the country needs to leave the European Union without a deal. Officials believe a
No Deal would provoke a 10 percent spike in food prices catapulting the
economy into a recession.
FTSE 100 -0.4%,
German DAX -0.77%,
CAC 40-0.4%,
STOXX Europe 600
-0.53%. The
10-year
Gilt rose 0.3 basis points.
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INVESTMENT GRADE DEBT ROSE AGAINST JUNK BONDS in net prices linked to actual trades as a risk-off sentiment continues. Crude oil spiked following two tankers being attacked near the Strait of Hormuz threatening the global supply, delivery of July crude shot up more than 4 percent before settling up 2.09 percent. Director of research at GraniteShares stated, “The nature of these events is that the outcomes are quite binary: either a major supply disruption event transpires or it does not.” The 10-year note lost 2.0 basis points. S&P +0.15%, DOW +0.15, NASDAQ +0.34%.
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INVESTMENT GRADE DEBT ROSE AGAINST JUNK BONDS in net prices linked to actual trades as a risk-off sentiment continues.
Crude oil spiked
following two tankers being
attacked near the Strait of Hormuz threatening the
global supply
, delivery of
July crude shot up more than 4 percent
before settling up 2.09 percent. Director of research at GraniteShares stated,
“
The nature of these events is that the outcomes are quite binary: either a major supply disruption event transpires or it does not.”
The 10-year note lost 2.0 basis points
. S&P
+0.15%,
DOW +0.15,
NASDAQ
+0.34%
THE NUMBER OF AMERICANS FILING UNEMPLOYMENT APPLICATIONS increased last week to a five-week high rising by 3,000 claims. Despite the modest climb in jobless claims, the
labor market remains robust and unemployment maintains its
near historic 50-year lows. Trade war flare-ups and the
lack of skilled labor
have hindered the economy
causing anxiety
and a slowdown for hiring in the retail, construction and manufacturing sectors.
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,
Public Service Electric And Gas Company (USD) 5.7% 12/1/2036
made analysts' 'Conviction Buy' lists. (See the chart for
ADI
indexes
above.)
Corey Mahoney (
cmahoney@advantagedata.com).
| Key Gainers and Losers |
Volume Leaders |
| + |
HCA Inc. 5.375% 2/1/2025 |
+ 0.2% |
| |
Whiting Petroleum Corp. 6.625% 1/15/2026 |
+ 0.3% |
| - |
Genworth Financial Inc. 7.625% 9/24/2021 |
-0.0% |
|
Frontier Communications Corp. 11% 9/15/2025
Chesapeake Energy Corp. 8% 1/15/2025
|
| Industry Returns Tracker |
| Industry |
Past Day |
Past Week |
Past Month |
Past Quarter |
YTD |
Past Year |
| Agriculture, Forestry, Fishing |
0.13% |
0.85% |
1.72% |
2.68% |
7.58% |
10.04% |
| Mining |
-0.45% |
-0.19% |
-2.51% |
-0.36% |
6.46% |
1.17% |
| Construction |
-0.02% |
0.69% |
1.12% |
3.89% |
8.90% |
6.63% |
| Manufacturing |
-0.08% |
0.60% |
0.11% |
1.95% |
7.54% |
5.74% |
| Transportion, Communication, Electric/Gas |
-0.13% |
0.42% |
1.21% |
3.46% |
8.75% |
8.08% |
| Wholesale |
-0.09% |
0.56% |
0.84% |
2.84% |
9.13% |
6.03% |
| Retail |
-0.05% |
0.81% |
0.61% |
4.86% |
11.17% |
8.52% |
| Finance, Insurance, Real-Estate |
-0.02% |
0.64% |
0.77% |
2.75% |
8.61% |
7.83% |
| Services |
-0.07% |
0.74% |
1.13% |
3.02% |
9.11% |
7.98% |
| Public Administration |
0.02% |
1.16% |
1.47% |
2.65% |
8.21% |
13.49% |
| Energy |
-0.43% |
-0.25% |
-2.45% |
-0.35% |
6.22% |
0.86% |
| |
| Total returns (non-annualized) by rating, market weighted. |
|
| New Issues |
Forward Calendar |
| 1. Outfront Media Capital LLC (USD) 5% 8/15/2027 Reg S (06/13/2019): 650MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5%. 2. Harsco Corp. (USD) 5.75% 7/31/2027 Reg S (06/13/2019): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.75%. |
1. Diamondback Energy Inc.: High-yield notes, Expected Q2 2019
2. Harsco Corp.: Unsecured Debt, Expected Q3 2019
|
Additional Commentary
NEW ISSUANCE WATCH: on 6/13/19 participants welcome a $500MM new corporate-bond offering by Harsco Corp.
The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 6/7/19, with a net outflow of $3.2B, year-to-date $6.6B 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) |
SuperValu Inc. (5Y Sen USD MR14)
Atmos Energy Corp. (5Y Sen USD MR14) |
Loans and Credit Market Overview
SYNDICATED LOANS HIGHLIGHTS:
Deals recently freed for secondary trading,
notable secondary activity:
- Perforce Software Inc., Avantor Performance Materials Inc., United PF Holdings LLC
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 22 bp (basis points), as of 06/13/19
- Net positive capital flows into high-yield ETFs & mutual funds
Copyright 2019 Advantage Data Inc. All Rights Reserved. http://www.advantagedata.com
Information in this document should not be regarded as an offer to sell or solicitation of an offer to buy bonds or any financial instruments referred to herein. All information provided in this document is believed to be accurate. However, Advantage Data and its sources make no warranties, either express or implied, as to any matter whatsoever, including but not limited to warranties of merchantability or fitness for a particular purpose. Opinions in this document are subject to change without notice. Electronic redistribution, photocopying and any other electronic or mechanical reproduction is strictly prohibited without prior written permission from Advantage Data Inc.
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EUROZONE CREDITORS FOREWARN THAT GREECE
is in danger of missing its budget targets, therefore, risk of
falling short
of its agreed upon commitment last year. “
We are concerned that the fiscal measures adopted last month put the fiscal target of the primary surplus of 3.5% of GDP at risk.” Investors remain optimistic as
Greek stocks surge
meanwhile
Greek bond yields plummet
to record lows.
FTSE 100 -0.07%,
German DAX +0.37%,
CAC 40
+0.02%,
STOXX Europe 600
+0.15%. The
10-year Gilt dropped 3.2 basis points.
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