Morning Commentary: Wayfair slips after Thursday’s carnage; U.S. Steel, Lam Research up

By Rebecca Melvin

New York, Nov. 1 – Wayfair Inc.’s convertibles continued to trade down early Friday after the paper slid along with the underlying common stock by double digits on disappointing earnings on Thursday. The convertibles market overall ended the month on a down beat amid a plethora of earnings.

Early Friday, Wayfair’s 1% convertibles due 2026 traded at 87.95, which was off by 0.3 point, according to Trace data. The Wayfair 0.375% convertibles due 2022 traded at 105.33, which was off from 105.7 last on Thursday. A week ago, the Wayfair 0.375% notes had traded as high as 127.9.

Moving in the opposite direction, United States Steel Corp.’s 5% convertibles due 2026, which priced two-weeks ago, spiraled up to 119.25, which was an outright climb of more than 11 points on the day. Shares of the Pittsburgh-based steelmaker, which slumped last month, surged $2.00, or 17%, to $13.51.

“U.S. Steel bonds continue to go higher dollar neutral post earnings,” a New York-based market source said, suggesting a 1-point expansion on Friday, coming on top of a 2-point improvement since issue on Oct. 16.

Investors seemed enthused by U.S. Steel’s smaller-than-expected loss on slightly better-than-expected revenue. U.S. Steel said it lost $0.21 per share compared to expectations for a $0.29 per share loss.

In addition, Lam Research Corp.’s convertibles were pulled into trade on Friday, and the 2.625% notes due 2041 were lifting along with the underlying common shares of the Fremont, Calif., semiconductor equipment maker. The bonds were up 19 points to 853.5, according to Trace data, as shares were up $2.87, or 1%, to $274.30. Lam reported better-than-expected earnings a week ago.

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