Rates Market

US Treasuries remained range bound throughout the week, closing the month with slight gains.
Overall, the yield on the 10-year Treasury only moved ~13bps throughout trading sessions in September.
Curves are closing marginally steeper to start the month, with 2s/10s at 55.9bps and 5s/30s at 120.1bps. The 10-year yield is cheaper at 0.691%.
Headlines out Friday on the President and First Lady’s positive COVID results, as well as the weak jobs numbers did little to the impact the overall curve.

Source: Bloomberg.

Corporate Market

The corporate spread for the iShares iBoxx Investment Grade Corporate Bond ETF, LQD, was approximately -8bps tighter this week.
Primary Issuance – For the month of September, primary calendar for bond issuance was focused inside 10yrs vs long-end (June to August). Issuers continue to call high coupon maturities in the front end to refinance out longer at low rates.
Year-to-date run rate is 67% ($1.55 trillion)
Week-to-date $14 billion vs $25 billion expected

Source: Bloomberg.

Corporate New Issue Highlights

Jefferies Group $500 million 12-Yr deal - $500m WNG 12Y Fixed (Oct. 15, 2032) at +217
Mondelez $1.25 billion 2 part deal
- $625m 12Y Fixed (Oct. 15, 2032) at +122
- $625m Tap of MDLZ 2.625% 09/04/50 at +135
Danaher $1 billion 30-Yr deal
- $1b 30Y Fixed (Oct. 1, 2050) at +123

After little movement in yields for most of the month, the AAA benchmark muni curve pivoted around the 5 year steepening 4bps on the week and approximately 7bps month-to-date.
Amidst concerns over the ability of state and local governments to continue to weather the pandemic fallout without additional stimulus, municipal bond funds saw outflows of $775mm for the week ended 9/30. This marks the first outflow since May after 20 consecutive weeks of inflows.
Moody’s downgraded NYC’s credit rating to Aa2 from Aa1 citing financial strains in response to the virus as well uncertainties surrounding the city’s economy in a prolonged pandemic. The city plans to issue $1.1 billion in GO’s next week to finance capital projects and lock in some outstanding floating rate debt.
Q3 issuance was the highest Q3 issuance since 2011, $135 billion with approximately 1/3 being taxable. 30-day visible supply sits at $17.7 billion and will likely grow further heading into the election.

Source: Bloomberg