While monetary accommodation drove high yield issuance in February, worries over the Federal Reserve’s policy on the federal funds rate took over in March.
Advance retail sales fell for the third successive month in February 2015, keeping open the possibility that the Fed may delay a rate hike this year.
The U.S. Department of the Treasury conducted the weekly auction for four-week Treasury bills, or T-bills, on March 10. The issuance was $40 billion.
The U.S. Department of the Treasury auctioned 13-week Treasury bills (BIL) (MINT) worth $26 billion on March 9. Auction demand was lower in the week.
The U.S. Department of the Treasury held the weekly 26-week Treasury bills (BIL) (MINT), or T-bills, auction on March 9. T-bills worth $26 billion were on offer.
The US Treasury holds monthly auctions for the three-year T-note. The yield on the three-year T-note is related to movements in the federal funds rate.
The U.S. Department of the Treasury conducts a ten-year Treasury note, or T-note, auction every month. The auction was held on March 11.
The monthly auction for the 30-year Treasury bond, or T-bond, was held on March 12 for $13 billion. It was $3 billion lower than the previous two auctions.
Treasury yields fell nearly across the curve in the week ending March 13, 2015. The start of the Eurozone bond buying program was the primary driver.
High-grade bond issuance remained unabated in the week to March 13, making it the second as well as the back-to-back week of more than $60 billion issues.
Last week, Zimmer Holdings, Inc. (ZMH) was the largest issuer with a seven-part $7.65 billion bond issue. It was the fifth largest jumbo deal of 2015.
Corporate investment-grade borrowing marginally declined to $62.34 billion in the week to March 13, 2015, the second-highest issuance in 2015.
Low-yielding Treasuries made corporate bonds attractive, and investors turned to higher yielding investment-grade and high-yield debt and related ETFs.
Yields on US sovereigns fell in the week ended March 13. Along with Treasury yields, corporate bond yields also fell.
It will be interesting to see if the noise about breaking up J.P. Morgan turns into anything meaningful this time, or if it fades away again with time.
The debt-to-equity ratios of several top tech companies suggest that the broader markets are much more leveraged than tech stocks.
Mature tech companies have a lot of cash in their coffers. Companies such as Apple reported 4Q14 net income of ~$18 billion—its best ever.
The single biggest cause for the upward movement in Treasury and corporate bond yields was the non-farm payrolls report.
The OAS fell to 1.29% over the week, down 11 bps from the previous week. This spread implies that risk of high-grade bonds relative to Treasuries decreased.
Actavis (ACT) led the week with a $21 billion issue, the largest in 2015 so far and the second largest ever next to Verizon’s $49 billion issue in 2013.