facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause
Weekly Fixed Income Views from March 19, 2021 Thumbnail

Weekly Fixed Income Views from March 19, 2021

Rates Market

  • Yields on U.S. Treasuries continued to climb as the Federal Reserve remained the focus this week.
  • The curve steepened further on Friday, with the spread between the 2-year note and 30-year bond reaching 232bps, wider by 4bps on the week.
  • The 10-year yield rose as much as 4 basis points to 1.75% after news that the Fed will not extend the bank relief put in place at the onset of the pandemic, causing some deleveraging.
  • Massive supply of cash continues to flood the market as primary dealer reported holdings were down $16 billion.
  • Wednesday’s Fed minutes revealed a very dovish tone as it is unlikely that the Feb will raise interest rates within the next three years.
  • The front of the bill curve remains near zero as repurchase agreements and money markets continue to enter negative territory.  Yields out the curve past 5-years moved higher, in line with inflation expectations.

Source: Bloomberg.

Corporate Market

  • The corporate spread week-to-date for the USD Investment Grade All Sector OAS was tighter by +1bps.
  • Investment grade funds recorded $5.43 billion in inflows vs $3.3 billion in inflows the prior week.
  • High yield funds reported $410 million in inflows vs $5 billion in outflows the prior week.
  • New issuance week-to-date of $24 billion fell short of the street’s projected amount of $35 billion as the market digested the FOMC meeting and the rise in rates.
  • The new issue deals still had a healthy interest book at 2-3x.
  • Year-to-date issuance $383.9 billion (+35% year-over-year).

Source: Bloomberg.

Corporate New Issue Highlights

  • Marriott Intl priced a $1.1bln 10Y
  • $1.1b 10Y Fixed (April 15, 2031) at +140
  • Toyota priced $2.75 billion in 3 parts
  • $1.25 billion 3Y Fixed at +35
  • $1 billion 5Y Fixed at +48
  • $500 million 10Y Fixed at +65
  • Schwab priced $4 billion in 3 Parts
  • $1.5 billion 3Y Fixed (March 18, 2024) at +43
  • $1.25 billion 3Y FRN (March 18, 2024) at SOFR+50
  • $1.25 billion 7Y Fixed (March 20, 2028) at +75
  • Raymond James priced $750 million (deal was upsized from $500 million)
  • $750 million 30Y Fixed at +130

Muni Market

  • Municipal yields rose 6-12bps higher, underperforming Treasuries, as inflation concerns continue to drive rates higher after the Federal Reserve confirmed interest rate policy will remain accommodative through the recovery.
  • Ratios were slightly higher on the week with some relative value inside 5 years, but remain on the richer side of longer term averages outside of 5 years. 
  • Municipal funds saw $1.27 billion of inflows for the week ending 3/17.
  • Earlier in the week President Biden revealed his tax policy change proposals, increasing corporate tax rates from 21% to 28%, higher taxes on earners over $400k, and increasing capital gains and estate taxes among them.
  • Visible supply hovers around $12 billion, above the 2021 average.

Source: Bloomberg.