Morning Commentary: High-grade market quiet after light deal week; inflows strong

By Cristal Cody

Tupelo, Miss., Aug. 3 – Primary action quieted early Friday with issuance remaining light at about $8 billion of investment-grade supply for the week.

About $15 billion to as much as $25 billion of bond supply had been expected by syndicate sources, though some predicted light volume due to early to mid-week central bank meetings that included the Federal Reserve and Bank of Japan as well as Friday’s release of the monthly employment report.

The Labor Department announced on Friday that total U.S. nonfarm payroll employment rose by 157,000 in July, while the unemployment rate dipped by 0.1% to 3.9%. Market analysts had expected a job gain of 193,000 and a higher jobless rate of 4.0% for the month.

For the week ended Aug. 1, Lipper US Fund Flows reported inflows of $1.21 billion for corporate investment-grade funds, compared to the $1.99 billion of inflows in the previous week and $2.02 billion of reported inflows in the prior week.

Inflows to the overall high-grade space, which includes corporates, Treasuries, agencies and mortgages, rose to $2.23 billion for the week ended Wednesday from $1.61 billion in the previous week, according to a BofA Merrill Lynch research note released on Friday.

Short-term inflows improved to $800 million from $690 million, while outside of short-term climbed to $1.43 billion from $910 million.

“ETF inflows, which tend to be more dominated by institutional investors, increased notably to $0.96 [billion] from $0.15 [billion], while inflows to high grade funds declined a bit to $1.27 [billion] from $1.46 [billion],” Yuri Seliger, a BofA Merrill Lynch analyst, said in the note.

Looking at secondary market action for the week, trading volume totaled $16.9 billion on Thursday, compared to $18.63 billion on Wednesday, $26.77 billion on Tuesday and $16.82 billion on Monday, according to Trace.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.