facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause
Weekly Fixed Income Views from February 12, 2021 Thumbnail

Weekly Fixed Income Views from February 12, 2021

Rates Market

  • Treasuries were slightly weaker across the curve as risk assets continued to march higher.  
  • The curve steepened further Friday as the yield on the two-year remained locked around 10 basis points and 10-year notes moved back to the high end of the range at 1.19%. 
  • Earlier in the week, government bonds found some solid ground as inflation data came in lower than expected. The current 10-year note traded as low as 1.11% on Feb 11th.  
  • Supply was also a factor this week as weak auctions drove prices lower in the long end of the curve.  The new 30-year bond “tailed” by 1 basis point and saw weak demand by indirect bidders (generally foreign investors).  
  • The treasury will sell 27 billion in 20-year bonds next Wednesday, and 9billion in 30-year Tips.  This has become important to markets, as larger stimulus plans may be expected from the government.

Source: Bloomberg.

Corporate Market

  • The corporate spread week-to-date for the USD Investment Grade All Sector OAS was tighter by 2 bps.
  • The Investment Grade index crossed over through 90, currently at 88.4.
  • Investment-grade funds recorded $2.7 billion in inflows.
  • High Yield funds reported $228 million in outflows.
  • It was a quiet week in primary issuance as the U.S. observes the holiday long-weekend
  • Week-to-date issuance of $15 billion vs $25-30 billion projected.
  • Year-to-date issuance of $188.6 billion (+14% year-over-year).
  • Month-to-date issuance of $61.1 billion.

Source: Bloomberg.

Corporate New Issue Highlights

Electronic Arts priced $1.5 billion in 2-parts

  • $750m 10Y Fixed (Feb. 15, 2031) at +72
  • $750m 30Y Fixed (Feb. 15, 2051) at +102

Carnival Corp priced $3.5 billion 6NCL 

  • Yield 5.75%
  • 144a issue

JPMorgan priced $billion 4NC3 Social Bond +37.5

  • Fixed to Float
  • SOFR +37.5

Muni Market

  • Municipals outperformed Treasuries on the week, with yields 2-6bps lower moving ratios to record lows.
    • 5yr ratio    ~ 41%
    • 10yr ratio  ~58%
    • 30yr ratio  ~73%
  • Inflows into municipal funds continued for the 14th consecutive week, adding $2.6 billion. 
  • Supply/demand dynamics remain a tailwind as redemptions outpace supply as well as roughly 30% of taxable new issuance.
  • State and local governments are expected to issue $5.2 billion next week. Notable deals include; Regional Trans Sales Tax $818.1 million, City of Tucson AZ $658.1 million, Nashville & Davidson County TN $551.1 million.

Source: Bloomberg.