- Treasuries were down on the week out the belly of the curve, as the yield on the 10-year continued to climb in the new year.
- The curve steepened further Friday as the yield on the two-year touched lows of 0.10%, last seen in March 2020, while the long end rose by almost ~5bps to 1.94%.
- 10s were trading around 1.16% on Friday, while the spread between 5s and 30s climbed to highs of 148bps.
- January’s job number came in weaker than expected, helping to bolster stimulus talks out of D.C. and President Biden’s $1.9 trillion relief package.
- Headlines remain focused on stimulus, vaccination updates and earnings strength moving into next week.
- The corporate spread week-to-date for the USD Investment Grade All Sector OAS was tighter by 7 bps.
- Investment-grade funds recorded $6.15 billion in inflows.
- High yield funds reported $1.3 billion in inflows.
- Busy week for new issuance as the market saw new debt exceed the street’s expectation by 50%.
- Year-to-date: $172.8 billion (+18% YoY)
- Month-to-date: $45.3 billion
- Week to date: $45 billion vs projected $30 billion
Corporate New Issue Highlights
Alibaba priced a $5 billion 4-part deal
- $1.5b 10Y Fixed at +100
- $1b 20Y Fixed at +100
- $1.5b 30Y Fixed at +120
- $1b 40Y Fixed at +130
Apple priced a $14 billion 6-part deal
- $2.5b 5Y Fixed (Feb. 8, 2026) at +32
- $2.5b 7Y Fixed (Feb. 8, 2028) at +47
- $2.75b 10Y Fixed (Feb. 8, 2031) at +57
- $1.5b 20Y Fixed (Feb. 8, 2041) at +72
- $3b 30Y Fixed (Feb. 8, 2051) at +82
- $1.75b 40Y Fixed (Feb. 8, 2061) at +95
Boeing priced a $9.825bln 3-part deal
- $1.325b 2NC1 Fixed at +105
- $3b 3NC1 Fixed at +125
- $5.5b 5NC2 Fixed at +175
- Benchmark municipals were slightly weaker (+1-2 bps) outperforming treasuries (+4-12bps) as a result of a steepening yield curve. Ratios moved lower.
- Municipal fund inflows continued adding $1.58 billion for the week ended 2/3, the 13th consecutive week.
- The Senate passed a 51-50 budget resolution with Harris as the tiebreaker. This will allow the new stimulus relief proceedings to move forward utilizing the reconciliation process which only requires a simple majority rather than the normal 60 vote requirement.
- Supply remains light with approx. 30% taxable. Next week, US state and local governments are expected to issue $6.85 billion. Notable deals include; State of Washington $862.6 million, Metropolitan Transportation Authority $700 million, City of Chula Vista, CA $349.1million.