CREDIT MARKETS
Treasuries:
Treasuries held onto gains Thursday, pushing yields lower, as investors focused on a report showing continuing claims for unemployment benefits in the latest week rose to the highest level since November 1982. The Treasury Department sold the 10-year notes to yield 2.419 percent. The sale is a second reopening of the quarterly issue, meaning the security will carry the same coupon and maturity as the notes issued in November. The government has now sold $52 billion of the security, which matures in November 2018, a record amount for a single maturity. The total number of people receiving unemployment benefits rose to 4.6 million in the week ended December 27th. The non-farm payroll report will show that the U.S. lost jobs for a 12th straight month in December. Obama warned that without immediate steps by the government to revive the economy, family incomes will drop and the unemployment rate could reach “double digits.” The economic calendar tomorrow is focused on the unemployment rate and the nonfarm payrolls. It could be a rough ride.
Municipals:
New York state completed the week’s largest U.S. municipal offering a day earlier than planned as a rally in tax-exempt bonds provided the lowest long-term yields since late August. Empire State Development Corp. sold $1 billion of revenue bonds, including tax-exempt debt due in 2028 and backed by New York personal-income tax revenue at 5.1 percent, compared with 5.16 percent at a similar sale
in November and 4.6 percent in August. Investors should consider buying municipal bonds, inflation protected Treasury notes and certain investment-grade corporate debt to take advantage of current and
potential government actions. The average yield on top-rated general obligation bonds due in 30 years fell six basis points, or 0.06 percentage point, to 5.32 percent today, the lowest since late September.
The final read on MMD was 2010: yields were unchanged; 2011-2017: yields were lower by 8bp; 2018: 9 yields were lower by bp; 2019-2023: yields were lower by 10bp; 2024-2026: yields were lower by 9bp; 2027: yields were lower by 8bp; 2028: yields were lower by 7bp; 2029-2038: yields were lower by 6bp;
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Commentary/New Issues
Corporate:
$600 MM, Progress Energy, 5.30%, 1/15/19, A2/A-, +285bp
$1.0 BLN, Walgreen, 5.25%, 1/15/19, A2/A+, +287.5bp
ABS:
Nothing
Agency:
$6.0 BLN, Fannie Mae, 2.00%, 1/9/12, +83bp
New Issues larger than $250mm. The fixed income offerings mentioned above are for informational purposes only. Toussaint Capital Partners, LLC, member NASD/SIPC, and/or its affiliates may be a participant in the offerin mentioned and therefore offerings will be subject to availability.
All statistical data is sourced from Bloomberg Financial Markets