9th June, 2025

Encouraging data on the labor front propelled the stock market to new heights last week with the S&P500 closing above 6,000 for the first time since late February, while the Dow and the Nasdaq enjoyed their second straight winning week. However, the rush to riskier assets took a toll on the Treasury market where yields rose more than 10bp across the board, with the benchmark 10yr note closing above the 4.50% mark (4.51%) for the first time in two weeks.

But we’ll have to wait and see if the rally in equities can be sustained as we head into a week which will bring enough data – May CPI (m-o-m 0.2%. y-o-y 2.5%) on Wednesday, May PPI (0.2% m-o-m. 2.6% y-o-y) on Thursday and University of Michigan sentiment (53.5) on Friday - to either boost or undermine investor confidence

That should keep high-grade corporate issuance, which is expected to be steady but slower, confined to the early part of the week, though there were no deals announced overnight. We have been told to expect at least five potential borrowers to be assessing market conditions this morning. According to our weekly issuance poll, the Street isn't really expecting any change from last week's level of activity in the high-grade primary market with the average estimate coming in at a rather modest $23bln, though there are some who believe we could see as much as $30bln in ex-SSA issuance cross the tape. However, there are also those who believe no more than $15bln is in the cards for this week.

This following the second straight week, and the fifth week this year, that ex-SSA issuance failed to meet the Street’s expectations. Twenty-four issuers raised $26.75bln, just short of the average weekly estimate of $28bln. While ex-SSA issuance failed to live up to the hype, overall (SSA-inclusive) issuance ($40.6bln) managed to top the average weekly estimate of $35bln. That brought ex-SSA issuance for the year to $833.336bln, putting it 2.3% ahead of last year at this time, while overall issuance is running 1.2% ahead of last year.

As for market conditions this morning, futures are indicating a modestly mixed open for the three major averages, while Treasuries are attempting to rebound from Friday’s drubbing as the markets look ahead to some encouraging news on the trade front where the US and China are expected to hold trade talks in London sometime this week, if not today.

The benchmark 10yr note is trading 1bp better this morning at 4.50%, while the 2yr note is trading 2bp lower at 4.01%. However, the long bond yield is unchanged at 4.97%.

In the meantime, corporate spreads continue to tighten with the average high grade bond trading 87bp over comparable Treasuries. Credit spreads have tightened 18bp over the last month to their tightest level in three months, while Treasury yields have risen 21bp.

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2025 HIGH GRADE ISSUANCE - 06/09 WEEK, JUNE & 2025 ESTIMATES

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2025 HIGH GRADE ISSUANCE - RECENT MANDATES

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