- The US Treasury market experienced steep losses this week as the selloff brought treasury yields to recent highs heading into month-end.
- The 10-year yield remains more than 12 bps higher on the week, trading today in the middle of the range of 1.37% to Thursday's high of 1.61%.
- The spread between the 5-year note and 30-year bond rose to a high of 163 bps on Wednesday, recovering back to 141 bps today.
- The $62.0 billion seven-year note auction tailed 4 bps with at a yield of 1.195%, showing very weak demand and one of the worst auction tails in its history.
- Friday’s economic releases pointed to growth in U.S. personal income, with consumer spending rebounding up 2.4%. Market sentiment remains focused on inflation trends and the stimulus package out of D.C.
- The corporate spread week-to-date for the USD Investment Grade All Sector OAS was wider by +6 bps.
- The USD Investment Grade All sector OAS index is back above 90.
- Investment grade funds recorded $4.22 billion in inflows.
- High Yield funds reported $2.22 billion in outflows.
- Primary issuance year-to-date: $237.5 billion (+8% year-over-year)
- Primary issuance month-to-date: $109.9 billion
- Primary issuance week-to-date: $33.45 billion vs projected $30 billion-$40 billion.
Corporate New Issue Highlights
- Truist Financial priced $1.25 billion 6NC5 Fxd-to-FRN
- $1.25b 6NC5 Fxd-to-FRN (March 2, 2027) at +50
- Daimler Finance priced $3 billion in 3-parts
- $1.5b 3Y Fixed (March 1, 2024) at +48
- $1b 5Y Fixed (March 2, 2026) at +70
- $500m 10Y Fixed (March 2, 2031) at +95
- Bank of Nova Scotia priced $1.25 billion in 2-Parts
- $950m 5Y Fixed (March 2, 2026) at +47
- $300m 5Y FRN (March 2, 2026) at SOFR+54.5
- Municipals took a bit of a breather on Friday after a 2-week slide from record levels with benchmark yields 3-28bps higher on the week, underperforming Treasuries.
- On a relative value basis vs Treasuries, municipal ratios remain low, but have moved closer to longer-term averages.
- Municipal funds saw just $38 million in inflows for the week after $1.8 billion the week prior, a sharp decline and a possible beginning of an outflow cycle after 16-straight weeks of inflows driving municipals to record highs.
- Yields on primary issuance were repriced higher in order to attract investors as Treasury yields marched higher.
- Next week, state and local governments expect to issue $6.51 billion. Notable deals include; New York City $1.45 billion, Baltimore County MD $658 million, NYC Municipal Water Finance Authority $573.2 million, Bay Area Toll Authority $569.9 million.