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Tuesday, 24 October 2017

US IG BONDS WRAP: New issuers wait out global growth concerns

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The momentum in the investment-grade bond market ground to halt Thursday, as no new issues were announced in the wake of bad economic news out of China and the eurozone.

Risky assets were under pressure all morning after new data showed China’s manufacturing sector activity shrinking for a fifth straight month as well as a eurozone contraction.

More than US$19.5bn in new high-grade bonds was priced over the first three days of the week, and the market has been red-hot: last month’s volume was the biggest February on record.

Thursday’s slowdown came despite encouraging news about the US labor market, which saw initial jobless claims decline to a four-year low.

At mid-day, the CDX IG18 was trading 2 1/2bp wider at 89.50, while the CDX HY17 was trading 5/8 of a point lower at 98.25.

Treasury yields were down across the board. The yield on the five-year note was 3bp lower at 1.11%, and the 10-year yield declined 3bp to 2.265%.

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