
Weekly Fixed Income Views from January 22, 2021
Rates Market
- Yields on the ten-year have remained range-bound this week, currently muted around ~1.09%.
- The curve was slightly steeper on the week, with 2s10s at 97.1bps versus last Friday at 94.6bps.
- The spread between the 5-year and 30-year bond reached highs of 142.1bps.
- Overall, the outlook for the Treasury market remains focused on longer term supply and the rate of inflation pick up.
Source: Bloomberg.
Corporate Market
- The corporate spread for the USD Investment Grade All Sector OAS was wider by 2 bps.
- Investment Grade Bond Funds reported by Lipper saw inflows of $8.25 billion, the fourth largest ever
- High-Yield Bond Funds saw outflows of $905 million vs $1.26 billion last week
- As the hunt for yield continues, CCC rated bonds are yielding all time lows (see chart below)
- The bulk of new debt being issued came from the financial sector
- Year-to-date, $100.3 billion has been issued (-8% YoY)
- There was $25.9 billion in new issues this week, compared with $25 billion projected
Source: Bloomberg.
Corporate New Issue Highlights
- Bank of New York Mellon issued $1.2bln in 2-parts:
- $700m 5Y Fixed (Jan. 28, 2026) at +35
- $500m 10Y Fixed (Jan. 28, 2031) at +55
- Citigroup issued $2.5bln 6NC5 Fixed to Floater at +68
- Goldman Sachs issued $5.5bln in 3-parts:
- $2.25b 2NC1 Fixed at +35
- $750m 2NC1 FRN at SOFR+41
- $2.5b 11NC10 Fxd-to-FRN at +90
Muni Market
- Municipals slightly outperformed Treasuries on the week with benchmark yields 1-3bps lower leaving ratios little changed.
- The municipal market continues to be supported by supply/demand dynamics, continued inflows, as well as anticipation of additional stimulus and changes in tax policy.
- Inflows into municipal funds continued for the 11th straight week adding $2.38b for the week ended 1/20.
- 30-day supply sits at $10.5 billion vs. $17.8 billion in redemptions.
- Next week $6.1billion is expected to price. Notable deals include; $1 billion Texas Gas, Los Angeles Dept. of Airports $758.9 million and Chicago Board of Ed $560.3 million.
Source: Bloomberg.