Morning Commentary: Trump policies seen as ‘bond bearish’; Deutsche, AT&T bonds improve

By Cristal Cody

Eureka Springs, Ark., Nov. 9 – Financial market participants focused early Wednesday on the reaction to a Donald Trump presidency with global markets opening lower, while high-grade bonds traded modestly better in the secondary market.

Trump’s policies are being viewed as “bond bearish,” according to a Confluence Investment Management, LLC note on Wednesday.

Deutsche Bank AG’s 4.25% notes due 2021 firmed about 2 basis points.

AT&T Inc.’s 4.125% notes due 2026, which tightened 7 bps on Tuesday, were quoted about 4 bps better early Wednesday.

Thin primary action is expected over the rest of the week, which includes a federal holiday on Friday.

About $1 billion of investment-grade bonds were sold on Monday with no issuance reported on Tuesday.

Market sources had expected about $5 billion to $10 billion of volume for the week.

The three-month Libor yield rose 1 bp to 89 bps on Wednesday.

On Tuesday, $14.9 billion of high-grade issues were traded, compared to $14 billion of bonds traded on Monday, according to Trace.

Deutsche Bank firms

Deutsche Bank’s 4.25% notes due 2021 firmed about 2 bps from the previous session to 289 bps offered, according to a market source.

The bank priced a $1.5 billion add-on to the notes on Oct. 11 at a spread of Treasuries plus 290 bps. The notes were originally sold in a $3 billion tranche on Oct. 7 at Treasuries plus 300 bps.

Deutsche Bank is a banking and financial services company based in Frankfurt.

AT&T tightens

AT&T’s 4.125% notes due 2026 were quoted early Wednesday 4 bps tighter at 159 bps offered, according to a market source.

The bonds headed out on Tuesday 7 bps tighter at 161 bps bid.

The notes were quoted trading at 146 bps bid on Oct. 21 before the company announced plans to acquire Time Warner Inc.

The company priced a $900 million add-on to the bonds on May 3 at Treasuries plus 150 bps. The notes originally were sold on Jan. 29 in a $1.5 billion offering at 195 bps over Treasuries.

AT&T is a Dallas-based telecommunications company.

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