Morning Commentary: Strong jobs data in focus; JPMorgan, Home Depot flat; CDX ‘at its wides’

By Cristal Cody

Tupelo, Miss., June 5 – High-grade bonds were mostly unchanged early Friday with long bonds among the most active as market participants studied the better-than-expected May jobs report, sources said.

The Labor Department said 280,000 jobs were added over the month, much higher than the 223,000 forecasted. The unemployment rate rose to 5.5% from 5.4% in April.

JPMorgan Chase & Co.’s 4.95% subordinated bonds due 2045 were flat in secondary trading.

Home Depot Inc.’s 4.25% senior notes due 2046 were unchanged.

The Markit CDX North American Investment Grade series 23 index closed 1 bp wider at a spread of 66 bps on Thursday.

“Credit sold off this week, and IG CDX is now trading at its wides since the March roll,” Barclays Bank plc analysts said in a note on Friday. “After a huge supply month of $155 [billion] in May, spreads are 10 bps off late April levels and within 5 bps of the wides of the past two years.”

Investment-grade supply is up 19% year over year, Barclays said.

JPMorgan stable

JPMorgan Chase’s 4.95% subordinated bonds due 2045 traded flat at 195 bps offered, a market source said.

JPMorgan sold $1.75 billion of the 30-year bonds (Baa1/A-/A) on May 21 at a spread of Treasuries plus 200 bps.

The financial services company is based in New York City.

Home Depot unchanged

Home Depot’s 4.25% notes due 2046 were unchanged at 127 bps offered, a market source said.

The company sold $1.25 billion of the bonds (A2/A/A) on May 28 at Treasuries plus 135 bps.

The home improvement retailer is based in Atlanta.

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