Intel trades in line; market quiet but higher with shares after Fed stands pat on rates

By Rebecca Melvin

New York, Sept. 21 – Intel Corp.’s 2.95% convertibles remained the name of the week on Wednesday, and were trading a bit higher on an outright basis and in line, or flat, on a dollar-neutral basis, as stock markets traded up ahead of Federal Reserve policy news and after the conclusion of a two-day policy meeting Wednesday afternoon.

As widely expected the Fed left rates unchanged but signaled that a rate hike in December would be appropriate if the economic data remained robust as it has been. Meanwhile the central bank downgraded its view of long-term economic growth to 1.8% from 2%, which had been previously downgraded.

The Dow Jones industrial average climbed 163.74 points, or 0.9% to 18,293.70, the S&P 500 stock index gained 23.26 points, or 1.1% to 2,163.12 and the Nasdaq Composite rose 53.83 points, or 1%, to 5,295.18.

In the credit market, U.S. Treasuries also gained, with the yield slightly lower at 1.668% on the U.S. 10-year Treasury bond from 1.687% on Tuesday.

Short covering following the Fed’s message of potential rate increase but continuing caution may have been behind some of the rise in Treasury prices.

Meanwhile the Bank of Japan left its interest rates and bond policy unchanged on Wednesday but said it is introducing yield curve controls for 10-year government bonds, with an eye toward steepening the yield curve.

Earlier this year the Bank of Japan introduced negative interest rates on certain commercial-bank deposits in an effort to push inflation up to 2% a year. That effort has not yet met its goal. The bank said on Wednesday that it will keep the negative rates and perhaps push them further negative at some point along with its new target on the 10-year bond.

The Intel 2.95% convertibles due 2035 traded just shy of 137, which was up nearly 0.3 point in the early going, according to Trace data. One New York-based sellsider put the level at 136.5 bid, 136.75 offered with the shares of the Santa Clara, Calif.-based semiconductor company at $37.15.

“I think they have found the proper level. There is decent volume going through, and they are right about in line,” the sellsider said of the Intel bonds.

The issue has been active amid speculation that the company could call the $1.6 billion of 2.95% convertibles.

Otherwise, the U.S. trading session was “not terribly busy,” the trader said. The tone was fine, although not strong amid a “relatively quiet tape,” he said.

SM Energy Co.’s 1.5% convertibles due 2021 traded higher, notching a 3-point gain to 113.38 intraday as shares of the Denver-based oil and gas company jumped $2.04, or 6%, to $35.28.

Newmont Mining Corp. shares also surged on Wednesday, jumping $2.88, or 8%, to $41.03. Trades in the Newmont convertible bond were not heard.

Mentioned in this article:

Intel Corp. Nasdaq: INTC

Newmont Mining Corp. NYSE: NEM

SM Energy Co. NYSE: SM

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