US bond markets are closed on Monday for Veterans Day, while the US stock market is open.
Markets are still reacting to the outcome of the US election, with Donald Trump winning a second term and his suggested tax, immigration and tariff proposals driving action in stocks and bonds. US stocks are once again opening the session this morning up sharply after shattering index records last week. Over in bond land, US Treasury yields are moving in a tight range after jumping last week, with the 10-year note issue hovering around 4.31%.
"Looking back at last week, US assets performed incredibly strongly after Trump’s win," Deutsche Bank Research said in a report. "Indeed, the S&P 500 was up 4.66% (+0.38% Friday), which is its best weekly performance of 2024 so far. Moreover, the gains mean the index has now surpassed its previous peak, with Friday marking its 50th record high of 2024."
For the week ahead, the US investment corporate bond market expects US$25bn to US$35bn of issuance, according to syndicate estimates. So far the high-yield pipeline is quiet, while activity in the structured finance arena is expected to pick up during the week.
No economic data releases are slated for Monday due to the holiday, but later in the week key inflation data, including the October CPI on Wednesday and the PPI on Thursday, are expected. Also, a large number of Fed speakers are scheduled in the days following the Veterans Day holiday.
"US data may not be as heavily scrutinized as usual at the moment as with the Trump victory, the market might conclude that there may be changes in animal spirits in the near-term and policy in the medium-term," Deutsche Bank said.
"There are a lot of Fed speakers so their view of policy post the election will be interesting after Powell navigated this uncertainty well last week," Deutsche Bank said. Federal Reserve chair Jerome Powell, who gave a press conference after the conclusion of the Fed's two-day FOMC meeting last Thursday, speaks again this Thursday
Two IG issuers raised US$1.2bn in the primary market on Friday, lifting weekly IG volume to US$1.9bn and November IG issuance to US$1.9bn, according to IFR data. The average new issue concession for the week was 4.33bp and the average order book was 2.37x subscribed, according to the data. The average progression from initial price thoughts to pricing was 21.67bp.
In the HY primary, one issuer raised US$500m on Friday, which was also the total for weekly and November HY volume.
The average IG bond spread narrowed on Friday by 1bp to 77bp and the HY bond spread tightened by 10bp to 263bp, setting new post-financial crisis spread records for both asset classes, according to ICE BofA data. US yields across asset classes tightened on Friday.
EQUITIES
The Veterans Day holiday is limiting deal-making opportunities in US ECM early Monday though robust post-election market conditions point to strong activity levels later this week.
Major US stock exchanges are open (and futures markets are pointing to another strong session), but bond markets are closed.
The SEC is shut to filing activity for the federal holiday, making it difficult for syndicate desks to bring registered stock offerings.
None of note launched in the pre-open and only one IPO, the delayed US$70.5m NYSE American listing of MLP Peak Resources, is slated for pricing this week.
Yet with the S&P 500 up 25.7% this year, including a 4.7% rally during election week, the short window through to Thanksgiving should provide fertile ground for marketed follow-ons and block trades.
The third-quarter reporting season is also 90% complete, clearing the way for opportunistic sponsor sales of their public holdings.
That said, Wednesday's October consumer price inflation print will provide another test for the bulls, especially with bond markets pointing to renewed price pressures and a slower pace of rate cuts.