Bond markets will be idle Monday while the stock market is open for business on the Columbus Day holiday in the US.
No IPOs or other stock sales are currently scheduled to price this week.
US ECM syndicate desks may struggle to get much momentum going in the coming few weeks as the start of the third-quarter earnings season and US presidential election fever pose significant distractions to equity issuers and investors alike.
The S&P 500 and the Nasdaq opened higher on Monday, with the benchmark index notching a record high as investors prepared for a week packed with corporate earnings and economic data.
US bank results will continue to come in with Bank of America, Citigroup and Goldman Sachs on Tuesday the highlights, Deutsche Bank Research said in a report today. Other notable names include Netflix and Blackstone on Thursday and Procter & Gamble on Friday, the bank said.
In equity markets last week, the S&P 500 ended up advancing 1.11% and posted a fifth consecutive weekly gain, with Friday seeing its 45th record high of 2024 so far, Deutsche Bank said. Banks saw a particularly strong performance after the start of earnings season, with the KBW Bank Index ending the week up 3.98% at its highest level since April 2022.
Among the data releases this week will be reports on import/export prices and retail sales, as well as construction and housing.
"In terms of this week, the key events will likely be on Thursday with US retail sales and jobless claims, alongside the latest ECB meeting," Deutsche Bank said. "Outside of this, US earnings season starts to accelerate after last Friday's unofficial start and there are plenty of central bank speakers to digest as well."
September US retail sales, Deutsche Bank said, will be a swing factor in putting together final Q3 GDP forecasts, but jobless claims could spike a significant amount higher due to the latest storm.
"The impact of the storm will also feed into this month's payroll data so there will be a lot of difficulty in assessing employment trends in the next several weeks," Deutsche Bank said. "Even retail sales might spike up a little this week as storm preparation in Florida may have boosted sales at the end of September."
Last week the ABS primary posted its busiest week of 2024, with issuance of over US$15bn, driving year-to-date totals to US$280bn versus US$216bn sold during the same period in 2023, according to IFR data.
Last week in the IG corporate primary, 13 issues in 20 tranches were priced totaling US$16.05bn, lifting October volume to 37 tranches totaling US$29.15bn, the data show. Last week the average new issue concession for IG offerings was 1.7bp and the average order book was 2.86x subscribed, according to the data. The average move from initial price thoughts to pricing was 26.13bp tighter.
BofA said it expects US$35bn-$40bn of IG supply this week.
In the HY primary last week, eight tranches were priced totaling US$5.41bn, pushing October volume to US$9.06bn from 13 tranches. Meanwhile, investors are taking a closer look at the Triple-C tier of the junk bond market for opportunities spurred on by looser monetary policy.
The average IG bond spread was unchanged at 84bp on Friday and the HY bond spread edged in 1bp to 298bp, according to ICE BofA data, and yields across asset classes were mixed.
"For IG spreads to remain at these tight and rich levels technicals need to remain exceptionally strong," BofA said in a report on Friday.
The bank gave two reasons why it sees risks to technicals this week.
"First, IG supply should accelerate to about $35bn, as the big six continue to have steady issuance needs in 4Q," the bank said. "Second, demand could weaken as US data continues to surprise to the upside, keeping interest rate volatility elevated. Our economists are calling for a strong Retail Sales report on October 17, for example."
EQUITIES
US ECM was quiet early Monday given the SEC’s filings system is closed for Columbus Day.
Yet major stock exchanges (the NYSE and Nasdaq) are both open for business.
No IPOs or other stock sales are currently scheduled to price this week, and few offerings are expected to launch Monday, though the same day last year brought one convertible offering post-close.
With just three weeks until the US presidential election and the third quarter earnings season only now getting under way, overall deal activity is likely to remain modest near-term and IPO action limited to deals that are already on file.
Recent filers Ingram Micro, Septurna, Infinity Natural Resources and Peak Resources are notionally closest to launching their IPOs, though some of these may choose to wait for a better window.
AI chip upstart Cerebras Systems, which filed publicly for a Nasdaq IPO on September 30 and would otherwise be ready to launch this week, is said to be delayed until November or December as the offering still requires sensitive regulatory approvals related to its a Middle Eastern backer.
Though it first filed confidentially in April last year, oilfield services firm Hornbeck Offshore Services also updated its filing last week in a sign it may be considering moving ahead soon.
ECM participants are also waiting on a potential US$10bn-plus equity offering from Boeing, a deal that could rank as the biggest secondary stock sale in years (though the company may opt to sell convertible bonds too).
Late Friday, the struggling aircraft maker hinted it may soon move ahead with the offering after firing 10% of its workforce and taking multi-billion charges against both its commercial airplane and defense divisions, due in part to the ongoing machinists’ strike.
New CEO Kelly Ortberg said Boeing was facing “near-term challenges”, but it was taking strategic decisions to restore the company and would ensure it had the “balance sheet necessary” to both invest and deliver for customers.