Political discord and geo-politics continue in the forefront of news and were well at play this week.
Weekends in 2026 have become sources of great volatility. This past weekend did not disappoint. On the Saturday prior to this week's trading on Tuesday, President Trump pledged a new wave of tariffs on European countries unless they agreed to allow the US to buy Greenland. The bargaining concept was a thorny attempt to force negotiations, Europe threatened to block US access to local markets. The US market response on Tuesday, put stocks, bonds, and dollar in turmoil. Front end Treasuries were little moved, but the 5-year, 10-year, 30-year were higher by 4-8bps, and the 2s-10s curve was higher by 6bps to 69bps. .President Trump gave his keynote address on Wednesday day at the World Economic Forum in Davos, Switzerland. Trump dismissed use of force over Greenland in speech, helping to calm the rifts between US and Europe. Not long after, President Trump announced the framework of a deal for Greenland and withdrew tariffs set to go into effect on Feb.1. His bargaining tactic to escalate, then de-escalate left the EU, not to mention NATO, feeling scorned..
Oil benchmarks posted substantial gains following the Financial Times' reporting on potential restrictions for Iraq's access to dollar liquidity amid concerns over government ties to Iranian-backed militias. Combined with President Trump's threats regarding an armada headed to the Gulf, both WTI and Brent posted session gains of more than three percent. WTI Mar26 closed today at $61.07 per barrel, + $1.71
The fallout from the discord caused traders to avoid the USD and led to a risk-off session during Friday's trade. Erratic foreign policy moves by the Trump administration in recent months, including its current pivot toward Greenland, have driven a massive rotation into precious metals as the preferred safe-haven asset.
Rates ended modestly lower today across the curve, but were little changed on the week.
Strong economic data today from the UMich survey, and previously from the GDP report, low Jobless Claims, and higher Personal Spending added to the sentiment. This week's data showed little to no improvement on the inflation outlook. Easing pressure on JGBs added support to the long end as fears of an Japanese sovereign debt crisis were attributed to a day of illiquid trading conditions.
Large cap stocks were lower in the Dow, and modestly higher in the S&P and NASDAQ today. .Major equity indices fluctuated this week with the DOW closing lower. by - 0.70%, the S&P lower by - 0.42%. and NASDAQ closing lower by - 0.12%. The Russell 2000 small cap index was lower this week, closing down by - 0.20%. Headline US economic data continues to show underlying strength in the US economy. Pro-cyclical and other economically sensitive sectors are moving higher. The Russell 2000, regional banks, and energy have rallied The latest Atlanta Fed GDP forecast for GDP of 5.4%.
HY Spreads were mixed this week and widened by three basis points to +268 in the Average.
CCCs narrowed by three basis point to +849. Bs were unchanged, and BBs widened by thee. Within the ICE/ BofA US HY Index, the Average return is higher for the week by + 0.095%. For the week, CCCs outperformed. The CCC rated sector was higher for the week by + 0.333%. Bs were higher by +0.073%. BBs closed higher by + 0.095% despite the modest moves higher in rates
One of the better new issues this week was an upsized $450m (from $400m) The Men's Wearhouse LLC (TLRD) 144a for life / Reg S 5nc2 senior secured note. B1 / B+. via Bookrunners: JPM+. UoP; together with TLB, to refinance the existing Term Loan and fund a dividend to shareholders. Investor call at 11:00AM EST n Jan 21 for expected pricing on Jan. 23. Biz: retail clothing stores. Hq'd in Houston, TX. The clothing retailer drew attention while coming to market in the wake of the Saks Global (SAGLEN) bankruptcy but found strong investor support. IPT: 9.75% - 10.00%, Px TALK: was 9.00% - 9.25%. The size was upsized to $450m from $400m. and the Term Loan increased by $150m. The bond priced on Jan. 22 at 9.00% with an order book of 1.7bn. Bonds went out $103.00 / 103.50 after breaking syndicate and traded today $103.375 / 103.625.
BlackRock’s Rick Rieder surged on betting markets as possible next Fed chair after receiving warm praise from President Trump at a Davos press conference. Implied aggregate easing in the futures market is down to 43 basis points for the year, from 58 bps on Jan 1
One new issue was announced yesterday, upsized twice, and priced today:
$3.30bn (from $3.0bn (from $1.66bn) [Asurion, LLC and Asurion Co-Issuer Inc.] (ASUCOR) 144a / Reg S 8nc3 second lien senior secured note. B3 / B. via Bookrunners: Morgan Stanley (Lead Left) / BAS / BARC / GS / DB / UBS / FTS. UoP: Together with cash on hand, to repay in full its Second Lien Term Loan B-3 and pay related fees and expenses, with any remaining net proceeds to be used for general corporate purposes, including the repayment of other outstanding indebtedness. Equity Claw: 40% for first 3 years at par plus coupon. Collateral Fallaway: Within twelve months of the repayment of all other junior lien debt, the Issuers have the option to release the collateral securing the Senior Secured Second Lien Notes permanently. Denoms: 2k x 1k..Investor call at 12:00PM EST today (Jan 22) for expected pricing on Jan 23. Biz:handset insurance services. Hq'd in Nashville, TN. Px TALK: 8.50% - 8.75%. books close at 10:00AM EST. LAUNCH: $3.0bn at 8.375%. add'l UoP to partially repay its 2nd Lien Term Loan B-4. books close at 12:30PM EST, pricing to follow. ADD'L UPSIZE: $3.30bn at 8.375%. add'l UoP to partially repay its 2L Term Loan B-4. Calls: 02/01/2029 @ 104.188%, 02/01/2030 @ 102.094%, 02/01/2031 @ 100.000%. mw+50. 144a: CUSIP: 045941AB7. ISIN: US045941AB79. Reg S CUSIP: U04907AB4. ISIN: USU04907AB48. Priced at 8.375%, +427 vs UST 4.50% 11/15/2033. s/d 01/30 (t+5).