Morning Commentary: Liquidity limited amid little news to move markets; Tesla firms with stock

By Stephanie N. Rotondo

Seattle, July 12 – With little fresh news to add any volatility, the convertible bond market continued to see limited volume in early midweek trading, a trader commented.

Additionally, investors were eyeing testimony from Janet Yellen, the Federal Reserve chairman. In her report to Congress, Yellen highlighted an improving economy and her belief that the market could not only withstand more interest rate hikes, but also a reduction in its investment holdings.

Of the convertible issues that were getting attention in mid-morning trading, Tesla Inc.’s 2.375% convertible notes due 2022 topped the list.

A market source saw the bonds moving back and forth between a 118 handle and a 119 handle, which was about 1 to 1.5 points better than Tuesday’s close.

Tesla’s stock (Nasdaq: TSLA) was also modestly better in early trading.

Synaptics Inc.’s 0.5% convertible notes due 2022 were also being eyed on Wednesday, as the bonds followed the stock upward.

A source pegged the paper at 103.5 bid, 103.75 offered. For its part, the company’s shares (Nasdaq: SYNA) rose $1.20, or 2.28%, to $53.86.

Meanwhile, Neurocrine Biosciences Inc.’s 2.25% convertible bonds due 2024 weren’t much changed as its stock trended higher.

The convertibles were seen in a 99.5 to par context, which was about unchanged on the day. However, the equity (Nasdaq: NBIX) was up 71 cents, or 1.57%, at $46.00.

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