Morning Commentary: Little movement in secondary amid equity volatility

By Abigail W. Adams

Portland, Me., July 13 – There was an uptick of activity in the secondary space on Wednesday following the release of the latest Consumer Price Index report, which blew past expectations.

However, the uptick of volume did little to move the needle with the convertibles secondary space largely unchanged as equities again wavered between gains and losses.

Equity indexes fought their way back from steep declines at the open and were mixed shortly before 11:30 a.m. ET.

The Dow Jones industrial average was down 200 points or 0.65%, the S&P 500 index was down 0.43%, the Nasdaq Composite was down 0.17% and the Russell 2000 index was up 0.09%.

“There’s still no conviction,” a source said.

There was $160 million in reported volume about two hours into the session with Southwest Airlines Co.’s 1.25% convertibles due 2025 (Baa1/BBB) continuing to dominate the tape.

“They’re still trading like crazy,” a source said.

While the 1.25% convertible notes have been the top trader in the secondary space for well over one week, the notes have seen little movement in price.

They were again unchanged in the flurry of activity early Wednesday.

The notes were changing hands at 124.375 early in the session with $20 million in reported volume.

Southwest stock was trading at 38.01, a decrease of 1.35%, shortly before 11:30 a.m. ET.

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