Rates Market

• Yields were muted on the last day trading day of the week, as 10-year yields hovered around ~0.85%.

• The ten-year tested the 200 day moving average, as yields touched 0.857% yesterday.

• On the week yields were higher as the curve steepened, with the spread between the 5 and 30-year bonds reaching a high of 129bps on Thursday.

• The front-end of the curve remains flat, and all headline drivers remain centered on the stimulus package and news out of DC.

Source: Bloomberg.

Corporate Market

• The corporate spread for the iShares iBoxx Investment Grade Corporate Bond ETF, LQD, was approximately flat to 4bps tighter this week.

• Investment Grade spreads tightened in at or thru February levels.

• The majority of new issuance came earlier in the week with healthy interest, averaging over 3x.

• Last week, China’s Ministry of Finance issued a 4-part deal totaling $6 billion that was well received. 
  • The market saw two new issues from China: a state owned bank – China Development Bank and shopping platform, Meituan. 

• Year-to-date run rate 68% ($1.59 trillion).

• Week-to-date $15.3 billion vs $15 billion expected.

Source: Bloomberg.

Corporate New Issue Highlights

• China Development Bank $1.5bln 2-part deal
• $1b 5Y at +75
• $500m 10Y at +95
• Meituan $2bln 2-part deal
• $750m 5Y Fixed (Oct. 28, 2025) at +180
• $1.25b 10Y Fixed (Oct. 28, 2030) at +225

• T-Mobile USA $4.75bln 4-part deal
• $1b 11Y Fixed (Nov. 15, 2031) at +148
• $1.25b Tap of TMUS 3% 02/15/41 at +160
• $1.5b Tap of TMUS 3.3% 02/15/51 at +190
• $1b 40Y Fixed (Nov. 15, 2060) at +205

Muni Market

• Benchmark municipal yields were off slightly with the curve approx. 2 bps steeper on the week outperforming Treasuries. Supply and stimulus remain the focus.
• The new issuance calendar remained crowded with another $19 billion issued on the week.  Continued fund inflows of $607 million and a third of total issuance being taxable have contributed to more muted effects on tax exempt yields.
• A stimulus deal before the election remains unlikely as discussions continue. Sticking points remain aid to state and local governments as well as business liability protections.  In the event an agreement is reached, it will still find difficulty passing in the Senate before the election. Senate Republicans prefer a smaller more targeted stimulus and are focused on the SCOTUS confirmation early next week. 
• Expected issuance next week is $12.2bn.
  • Notable deals include: LA Community College CA $1.79b; NYC Transitional Finance Authority Tax Secured Revenue $1.12b, LA Unified School District $1.06b ; South Carolina Public Service Authority $663.6mm.

Source: Bloomberg.