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Midday Commentary: Bonds rally on poor jobs report; Wells Fargo firms; Citigroup widens
By Cristal Cody
Tupelo, Miss., Oct. 22 - Investment-grade bond spreads opened unchanged ahead of the release of the September non-farm payroll report on Tuesday but rallied after the number came in lower than forecasted, according to market sources.
The Labor Department said in the report, delayed during the government shutdown, that 148,000 jobs were added in the previous month, below expectations of 180,000, sources said. The unemployment rate fell to 7.2% from 7.3%.
"Tone OK," a trader said.
In the secondary market, new issues from Wells Fargo & Co. and Toyota Motor Credit Corp. traded better, while Citigroup Inc.'s new 10-year notes widened about 5 basis points from where the issue priced on Monday.
Wells Fargo firms
Wells Fargo's 2.15% notes due 2019 (A2/A+/AA-) tightened to 77 bps bid, 76 bps offered, a trader said early Tuesday.
The issue priced as part of a $3.5 billion two-tranche offering on Monday.
The San Francisco-based financial services company sold $1.5 billion of the notes at a spread of Treasuries plus 85 bps.
Toyota Motor Credit better
Toyota Motor Credit's 2% medium-term notes due 2018 (Aa3/AA-/) firmed on the offered side to 60 bps, according to a trader.
Toyota Motor Credit sold $1.5 billion of the notes on Monday at a spread of Treasuries plus 65 bps.
Citigroup eases
In other new issue trading, Citigroup's 3.875% senior notes due 2023 (Baa2/A-/A) traded wider at 135 bps bid, 130 bps offered in the morning session, a trader said.
Citigroup sold $2 billion of the notes at a spread of Treasuries plus 130 bps on Monday.
The financial services company is based in New York.
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