THE FEDERAL RESERVE ABANDONS PLANS TO RAISE RATES IN 2019 dramatically shifting to a very dovish stance on economic policy. Jerome Powell reaffirmed his “patient” stance citing muted inflation, in addition, the Fed will terminate its balance sheet reductions in September. Powell stated, “I think we’re in a good place right now. We’re being patient, we’re watching, we don’t see any data pushing us to move rates in any direction. We’re going to watch carefully and patiently to allow events to evolve. And when they do clarify, we will act appropriately.” The 10-year U.S. Treasury note sank 8 basis point. S&P -0.29%, Dow -0.55%, NASDAQ +0.07%
Investment Grade Bond Research – March 20, 2019Posted on March 20, 2019
|Key Gainers and Losers||Volume Leaders|
|Standard Chartered PLC 2.1% 8/19/2019 144A
Massachusetts Electric Co. 2.304% 8/15/2046 144A
|Industry Returns Tracker|
|New Issues||New Issues [Continued]|
|1. Ingersoll-Rand Co. LTD (USD) 3.8% 3/21/2029 (03/19/2019):750MM Senior Unsecured Notes, Price at Issuance 99.901, Yielding 3.81%.|
Nutrien LTD The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 3/15/19, with a net inflow of $1.0B, year-to-date $8.2B 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)
|Cable & Wireless Communication (5Y Sen USD CR14)
San Miguel Corp. (5Y Sen USD CR14)
Loans and Credit Market Overview
SYNDICATED LOANS HIGHLIGHTS:
Deals recently freed for secondary trading, notable secondary activity:
- Nine West Holdings Inc., TruGreen LP, PetVet Care Centers LLC, XPO Logistics 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 17 bp (basis points), as of 03/20/19
- Net positive capital flows into high-yield ETFs & mutual funds
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