Lynn Noah

Let’s look at the high yield bond markets. Junk bond issuers stayed away from the primary market for three successive weeks in December due to holidays.

Visa Inc (V) issued A1/A+ rated high-grade bonds worth $16.0 billion via six parts. This included $1.75 billion in 1.20% two-year notes at a spread of 30 bps.

A lower cost of borrowing and tighter spreads have attracted foreign banks to flock to the US corporate debt market.

According to Lipper fund flow data, investment-grade bond funds saw net inflows of $2.2 billion during the week ended August 17, 2016.

US financials and Yankee issuers commanded 34.0% each of the primary market high-grade bond issuance in the week ended August 19, 2016.

The US Treasury auctioned five-year TIPS worth $14 billion on August 18. The overall demand for the securities fell 2.1% from the previous auction.

According to Lipper, in the week ended August 10, 2016, leveraged loan funds saw inflows of $96.4 million. In the previous week, inflows were $60.4 million.

The three US equity stock indexes we review in this weekly series were mostly flat from August 11–18, 2016. This came after the minutes from the July 26–27 FOMC meeting.

China’s State Council approved the long-awaited Shenzhen-Hong Kong Stock Exchange Link on August 16, 2016. The Shenzhen Composite Index gained 3.2% from August 12 to August 16.

According to Lipper funds flow data, investment-grade bond funds saw net inflows of $2.52 billion during the week ending August 10.

Westpac Banking Corporation (WBK) issued Aa2/AA- rated high-grade bonds worth $5.0 billion via five parts on August 11, 2016.

According to the Bloomberg US Treasury Bond Index, US government debt has returned 5.4% in 2016. Global investors are flocking to the US debt market (LQD) (AGG), primarily due to negative yields in Europe and Japan.

According to State Administration of Foreign Exchange, China’s foreign reserves fell by $4.1 billion in July to $3.20 trillion.

The SSE Composite Index rose by 1.4% to 3,002.64 from August 3 to August 10. The Chinese government bond yield fell after the decline in global bond yields.

In the week ended August 3, 2016, leveraged loan funds saw inflows worth $60.4 million. In the previous week, leveraged loan funds had outflows of $15 million.

According to S&P Capital IQ/LCD, US leveraged loans saw an allocation of $18.4 billion worth of dollar-denominated senior loans in the week ended August 5, 2016.

Treasury yields rose on August 2 after the Japanese cabinet approved 13.5 trillion yen ($132.04 billion) in fiscal measures to boost the staggering economy.

Microsoft (MSFT) issued Aaa/AAA rated high-grade bonds worth $19.8 billion through seven parts on August 1, 2016.

Investment-grade corporate bonds worth $51.5 billion were issued in the primary market in the week to August 5, 2016. High-grade issuance was $32.7 billion the previous week.

Although China has emerged has an economic superpower, its suppression of freedom of expression may be difficult for the country to sustain in the long run.

China fell into the “mostly unfree” category, according to the Index of Economic Freedom for 2016. It was ranked 144th and scored 52.0 on the index.

The one-child policy in China decreased population growth, but it produced social disadvantages such as gender imbalance and other social problems.

According to a recent Congressional report, 2015 was the worst year on record for human rights violations in China.

The Caixin China General Services Business Activity Index expanded at a slower pace in July to 51.7, down from 52.7 in June.

The China Caixin Manufacturing PMI (Purchasing Managers’ Index) rose to 50.6 in July from 48.6 in June. This indicates renewed improvement in operating conditions.

China’s official Manufacturing PMI for July came in at 49.9, down from 50.0 in June. This was mainly due to massive floods in some parts of China and weak demand.

The SSE Composite Index was mostly flat for the week ended August 5, 2016. It ended at 2,976.7 as investors lost interest in a further stimulus from China.

Post Holdings (POST) issued junk bonds worth $1.75 billion on July 25. The senior notes were rated B3/B and carried a coupon of 5.0%.

The total US dollar-denominated issuance of high-yield debt stands at $56.9 billion YTD in 2016—29% lower compared to the same period in 2015.

US corporates dominated the primary market for high-grade bonds in the week ending July 29. They accounted for 42.7% or $14.0 billion of all the issues.

Apple, Verizon Communications, Citigroup, and Royal Bank of Canada were among the large issuers of investment-grade bonds in the week to July 29.

According to the BofA Merrill Lynch US Corporate Master Effective Yield, high-grade bond yields have risen since the beginning of 2016.

The overall demand fell for the seven-year T-notes auction because the FOMC meeting didn’t give any clarity regarding an interest rate hike in the future.

The two-day FOMC meeting ended on July 27, 2016. As widely expected, the Fed kept its overnight interest rate target in the 0.25%–0.5% range.

Kyle Bass, an American hedge fund manager and founder of Hayman Capital, is almost certain that China will face massive write-offs.

The Westpac MNI China CSI fell by 1.6% to 114. 0 in July from 115.9 in June as consumers were worried about their personal incomes due to weakness in the labor market.

According to the National Bureau of Statistics, China’s industrial profits for firms above a designated size rose by 5.1% year-over-year to 616.3 billion yuan ($92.4 billion) in June.

US corporates dominated the primary market for high-grade bonds in the week ending July 22—making up 52.8% or $16.0 billion of all the issues.

Investment-grade corporate bonds worth $30.3 billion were issued in the primary market in the week to July 22, 2016.

EchoStar (SATS) is a global provider of satellite and video delivery solutions. It issued junk bonds worth $1.5 billion on July 20.

According to data from Lipper, leveraged loan funds saw back-to-back inflows, but the quantum of inflows was smaller than the previous week.

The FOMC (Federal Open Market Committee) is widely expected to leave interest rates unchanged, as policymakers will assess the impact of the Brexit vote on June 24.

China’s foreign reserves rose by $13.5 billion in June to $3.2 trillion. June’s increase was the largest in 14 months.

New loans issued by Chinese banks rose to 1.4 trillion Chinese yuan ($206 billion) in June from 985.5 billion yuan ($150 billion) in May.

China’s urban fixed-asset investments grew by 9.0% year-over-year in the first six months of 2016, compared with a 9.6% growth from January to May 2016.

China’s industrial production rose amid a recovery in the real estate sector and an increase in government spending on infrastructure projects.

In June, China’s CPI edged down to 1.9% year-over-year (or YoY) from the 2.0% rise recorded the previous month.

The SSE (Shanghai Stock Exchange) Composite Index rose 2.2% to 3,054.3 in the week ended July 15, 2016.

The inflows into the leveraged loan funds came in at $136.5 million during the week ending July 13—compared to an outflow of $17.5 million the previous week.

The US leveraged loan market saw an allocation of $3.3 billion worth of dollar-denominated senior loans in the week to July 15.

According to Lipper fund flow data, investment-grade bond funds saw net inflows of $2.9 billion during the week ended July 13, 2016.

Last week, high-grade bond yields rose after upbeat US inflation and retail sales data raised the possibility of a rate hike by the year’s end.

US Treasury yields rose across the yield curve for the week ended July 15, 2016, as robust US consumer inflation and retail sales data revived expectations that the Fed could raise interest rates this year.

According to data from Lipper, leveraged loan funds saw outflows for the fourth consecutive week. But the quantum of outflow was tepid.

Investor flows into high-yield bond funds were positive for the week ended July 6, 2016, after three consecutive weeks of negative outflows.

The three US stock indexes that we review in this weekly series rose from July 5–12, 2016. Robust US jobs data boosted investor sentiment and eased the fear of an economic slowdown.

Flows into investment-grade bond funds were positive last week. Investment-grade bond funds saw net inflows of $907.1 million during the week ending July 6.

A rebound in second quarter GDP growth and the rise in the manufacturing sector makes the case for a rate hike in December 2016.

Last week, high-grade bond yields fell due to growing panic and concern about global economic growth as the UK decided to leave the European Union.

Movement in investment-grade bond yields was driven by aftershocks following the Brexit vote. Last week, investment-grade bond yields fell.

Investors are flocking to safe-haven assets such as Treasuries (DRGBX) (TLT) and gold (IAU).

The Westpac MNI China CSI rose 1.5% to 115.9 in June from 114.2 in May, which shows that increased policy support continues to trickle through to the real economy.

According to the National Bureau of Statistics (or NBS), China’s industrial profits for firms above a designated size rose 3.7% year-over-year to 537.2 billion yuan.

Understanding the PMI China’s manufacturing purchasing managers’ index (or PMI) is an economic indicator that gives you a snapshot of the manufacturing sector. A reading above 50 indicates that activity is expanding while below 50 signals a contraction. The manufacturing PMI is based on five sub-indices—the production index, new orders index, employed person index, main […]

Chinese Premier Li Keqiang said at the World Economic Forum (or WEF) on June 28, “The Brexit impact on Chinese economy is little. China’s economy will not suffer a hard landing.”

AmeriGas Partners (APU) is a publicly traded MLP. It issued Ba3- rated junk bonds worth $1.35 billion on June 20.

According to data from S&P Capital IQ/LCD, the US leveraged loan market saw an allocation of $15.9 billion of dollar-denominated senior loans last week.

With the Brexit fallout, the Federal Reserve will most likely delay the next interest rate hike until the end of this year or even next year.

Flows into investment-grade bond funds were positive for the 15th consecutive week. They saw net inflows of $1.8 billion during the week ending June 22.

Commonwealth Edison Company is a unit of Exelon Corporation (EXC). It issued A2/A- rated high-grade bonds worth $1.2 billion through two parts on June 20.

Last week, the movement in investment-grade bond yields was driven by Brexit. Investment-grade bond yields fell for the week ending June 24.

Among the options for investing in high-dividend yield stocks, dividend mutual funds pay out a dividend at regular intervals to their fund holders. They hold a basket of equities that pay dividends.

Since insurance companies are highly dependent on their ability to generate interest income, rising interest rates can significantly boost profits.

A hike in interest rates increases the cost of borrowing for companies. Most publicly traded companies carry at least some debt to fund their operations, and higher borrowing costs can cause their profit margins to contract.

The ALPS Sector Dividend Dogs ETF (SDOG), which applies the “Dogs of the Dow” dividend strategy on a sector-by-sector basis to stocks trading in the S&P 500, has risen by 14.0% on a YTD basis.

The US Treasury auctioned 30-year TIPS (VIPSX)(LTPZ) worth $5 billion on June 22.

Beijing continues to open its capital account to offshore investors, and its toolkit of financial instruments to investors in China just keeps growing.

Jordi Visser at Weiss Multi-Strategy Advisers foresees China’s Shenzhen Composite Index (ASHR) as beating most global peers by the end of December 2016.

In a press conference on June 14 on its annual Article Four Staff Report, the IMF provided a positive assessment of China’s economy.

China’s MNI Business Sentiment Indicator rose sharply in June to 54.5 from 50.0 in May due to the availability of cheaper credit and better credit terms.

The SSE Composite Index fell for the week ending June 24. The United Kingdom’s vote to leave the EU caused tremors across global markets.

Investment-grade bond yields rose marginally for the week ending June 17. Corporate bond yields, as measured by the BofA Merrill Lynch US Corporate Master Effective Yield, rose 1 basis point on June 17 to end at 2.99%.

According to the People’s Bank of China, new loans issued by Chinese banks rose to 985.5 billion yuan ($150 billion) in May from 555.6 billion yuan ($85.2 billion) in the previous month.

In May 2016, China’s total retail sales of consumer goods rose 10.0% YoY (year-over-year) to 2.7 trillion yuan, slightly lower than the 10.1% growth recorded in April.

China’s ongoing decline in investment in the manufacturing and infrastructure sectors resulted in the slowest rate of growth in fixed asset investment since 2000 in May.

According to China’s NBS (National Bureau of Statistics), industrial production of enterprises above designated size grew by 6.0% YoY (year-over-year) in May 2016.

MSCI’s EMI (Emerging Market Index) has approximately $1.5 trillion of assets benchmarked to it, according to Goldman Sachs.

The SSE Composite Index fell by 1.4% to 2,885.1 from June 8 to June 17, 2016, after MSCI decided not to include China’s A-shares in its Emerging Market Index for the third straight year.

Yankee bond issuers dominated the primary high grade bond market in the week ended June 10, making up 30.3%, or $10.2 billion, of all issues.

It’s expected that the Fed may increase the interest rate soon, and 30-year Treasury bonds auction are closely watched by stock and bond investors.

In May, China’s CPI (or consumer price index) rose 2.0% year-over-year (or YoY), which was lower than the 2.3% rise recorded in the previous month.

The SSE Composite Index rose slightly by 0.4% to 2,927.16 from June 1 to June 8, 2016, as the market prepared for the long weekend.

Jim Chanos, the founder of Kynikos Associates, believes that China’s (ASHR) (FXI) outlook is pretty grim due to its immense debt burden.

The US Department of the Treasury’s 26-week Treasury bill, or T-bill, auction, totaled $26 billion last week.

China’s manufacturing sector has been plagued by weak demand, rising labor costs, overcapacity in industries, and tighter resource and environmental constraints.

The Caixin China General Services Business Activity Index indicated that service activity expanded at a slower pace in May 2016, coming in at 51.2.

China’s official non-manufacturing purchasing managers’ index is an economic indicator that provides a snapshot into the non-manufacturing sector of an economy.

The Caixin China manufacturing PMI (or purchasing managers’ index) contracted further in May 2016 and came in at 49.2 compared to 49.4 in April.

China’s manufacturing purchasing managers’ index (or PMI) is an economic indicator that provides a snapshot of the manufacturing sector of its economy.

The Shanghai Stock Exchange (or SSE) Composite Index rose from May 25 to June 1, 2016, and closed at 2,913.51 on June 1.