Morning Commentary: Convertibles secondary lifted post-CPI; Ventas hits new heights

By Abigail W. Adams

Portland, Me., July 12 – It was an active start to the day on Wednesday with buyers reemerging on the heels of a Consumer Price Index report, which reflected the slowest pace of inflation since 2021.

Bond yields plunged while stocks rallied as markets dialed back their bets on Fed rate increases post-July.

The Dow Jones industrial average was up 282 points, or 0.83%, the S&P 500 index was up 1.02%, the Nasdaq Composite index was up 1.29% and the Russell 2000 index was up 1.26% shortly before 11 a.m. ET.

The two-year Treasury yield fell 13.5 basis points to 4.74% and the 10-year Treasury yield fell 8 bps to 3.89% shortly before 11 a.m. ET after hitting as high as 5.11% and 4.08%, respectively, following the ADP employment report last Thursday.

There was $103 million in reported convertibles trading volume about one hour into the session, more than double the volume seen at this time over the past two session.

Ventas Realty, LP’s 3.75% exchangeable notes due 2026 (Baa1/BBB+) was the most actively traded issue in the secondary market with the notes hitting a new outright high.

The 3.75% notes gained 1 point outright.

The exchangeables were trading just shy of 104 versus a stock price of $49.37 early in the session, according to a market source.

There was $29 million in reported volume.

Ventas’ stock traded up to $49.08, an increase of 0.57%, shortly before 11 a.m. ET.

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