Rates Market

• Treasuries were under pressure during the week as stocks and stimulus talks gained traction.
• Yields moved higher across the curve led by the long end. Monday saw the 30year bond yield hit a high of 1.591%.
• The spread between the 5-year and 30-year steepened back above125bps compared to the year-to-date high of 128.5bps back in June.
• Heading into the weekend, 10-year Treasuries were trading around the new range at 0.775%.

Source: Bloomberg.

Corporate Market

• The corporate spread for the iShares iBoxx Investment Grade Corporate Bond ETF, LQD, was approximately-8 bps tighter this week.
• As we observe the Columbus Day holiday weekend, issuers came to the market earlier in the week with more than half of the projected volume done on Monday. 
• The average initial price talk tightened 30bps. 
• There is healthy demand as issuers take advantage of low rates.  
• Year-to-date run rate 67% ($1.57 trillion).
• Week-to-date $25 billion vs $15 billion expected.

Source: Bloomberg.

Corporate New Issue Highlights

• Steel Dynamics $750 million 2-part deal
• Deal was 15x oversubscribed and tightened -50bps from initial price talk
• $350m 7Y Fixed (Oct. 15, 2027) at +120
• $400m 30Y Fixed (Oct. 15, 2050) at +185
• Lowe's $4 billion 3-part deal
• $1b Long 7Y Fixed (April 15, 2028) at +75
• $1.25b 10Y Fixed (Oct. 15, 2030) at +95
• $1.75b 30Y Fixed (Oct. 15, 2050) at +140
• Conagra $1 billion 7-year
• Upsized the deal to $1bln from $750mln(will not grow)
• $1b 7Y Fixed (Nov. 1, 2027) at +100

Muni Market                          

• Municipals traded off with Treasuries on the week, the curve steepened 1-10 bps.
• Flows into Municipal bond funds reversed course after last week’s outflow of $775mm, adding $1.7bn for the week ended 10/7.
• Continued heavy issuance combined with uncertainties surrounding further stimulus will likely provide upward pressure on yields for the remainder of the month heading into the election.
•  After an abrupt tweet on Tuesday to postpone further stimulus talks and focus on smaller targeted measures, the White House came back to the table on Thursday open to a larger comprehensive stimulus bill. Both sides still remain divided on the size and content of the bill.
•  On the heels of a downgrade last week, NYC issued $1.125bn this week in GO bonds in a deal that was 4-5x oversubscribed but at wider spreads than the previous issuance in early March. 
• Next week’s issuance is expected to be $10.8bn. Notable deals include; City & County of Denver CO Airport System $924.9mm, City of Kansas City Missouri $607.6mm, Atlanta GA Water & Wastewater $503.7mm.
•  30-day visible supply sits at $19.1bn vs $19.4bn in redemptions.

Source: Bloomberg