Sep 6, 2019

The biggest week for bond sales on record had perfect timing

Illustration: Rebecca Zisser/Axios

U.S. companies issued $74 billion of investment-grade bonds this week, between Tuesday and Thursday, the most for any comparable period since records began in 1972, Bloomberg reported on Thursday. That nearly doubled the previous record of $40 billion set in 2013.

What happened: Issuers were able to sell into a historically thirsty market, with 30-year bonds from companies like Disney, Deere and Apple carrying record low coupons, and investment-grade bond yields dropping to a 3-year low of 2.77%.

  • The leveraged loan market even got a boost with 17 deals totaling more than $16 billion issued this week, the busiest since last October.
  • “If someone has near-term financing needs, they should be looking to take advantage of this window,” Jenny Lee, co-head of leveraged loan and high-yield capital markets at JPMorgan, told Bloomberg. “Things potentially could shut down or get more difficult as we head toward the back half of this year.”

Investors didn't have to wait until the back half of the year. The bond market took a hard turn on Thursday after the strong economic data and positive trade war news, spiking bond yields higher.

  • Benchmark U.S. 10-year Treasury yields jumped by nearly 12 basis points, the most since November 2016, and yields on the 2-year note saw the biggest 1-day jump since 2015.

Go deeper

The great bond selloff signals concerns about inflation

Data: U.S. Treasury; Chart: Axios Visuals

Treasury yields jolted higher last week as investors bailed out of safe-haven U.S. government debt, pushing yields up by the most in one week since June 2013. The selloff that began Sept. 4 sent yields on the benchmark 10-year Treasury note from 1.45% to 1.90% in less than 2 weeks.

Why it matters: While some have credited the spike in Treasury yields to renewed faith in the U.S. economy, the market is likely more worried about a return of inflation — a far greater ill for fixed income investors as it corrodes the value of already issued bonds.

Go deeperArrowSep 16, 2019

The stock market is overreacting

Stocks took a nosedive for the 2nd consecutive day on Wednesday and the Dow and S&P fell for the 4th time in 5 sessions. But the U.S. Treasury market experienced a far smaller move, as it has been factoring in manufacturing weakness and slowing job growth for months.

Why it matters: The bond market's limited movement in the face of historically weak manufacturing and deteriorating employment data suggests the worst may be over, analysts say.

Go deeperArrowOct 3, 2019

September's market reversal on stocks and Treasury bonds

Data: Investing.com; Chart: Axios Visuals

Stocks have steadily risen over the course of September, with the S&P edging up by around 3% month to date, while safe-haven U.S. Treasury prices have fallen, pushing yields higher, in a sign of investors' increasing appetite for risk.

Why it matters: The pickup in stock buying so far this month has been a major reversal of the trend seen in markets for most of the year. Capital flows had largely been going into bonds and money market funds and out of stocks.

Go deeperArrowSep 25, 2019