[MORNING CALL] Everyone Loves a Parade

Not only the Thanksgiving Day parade, but the parade of new issues. After 25 borrowers rushed to the high-grade primary market last week ahead of what is expected to be an abbreviated issuance Thanksgiving Week, a week that, over the last two years has failed to produce any more than $6bln, the Street isn't overly optimistic that issuance will paint a different picture.

On average, the Street is thinking we could see as much as $7bln cross the tape this week. However, the bears believe no more than $2.5bln is in the cards, while others, the very optimistic, are looking for as much as $15bln to price this week, which would push November issuance to the century mark, and right in line with the decade-long average November issuance of $101.1bln, and top the highest monthly average estimate of $90bln. But that's the very best-case scenario.

Those 25 borrowers were able to raise $36.75bln, topping the average weekly estimate for the thirty-fifth time this year. That also brought ex-SSA issuance for the month of November to $85bln, more than enough to top the monthly average estimate of $70bln - monthly issuance has topped the average estimate every month this year – though $5bln shy of the highest estimate of $90bln. It also falls short of the decade-long average ex-SSA issuance for November of $101bln.

Whatever activity we see in the primary market this week is expected to be frontloaded before the Street heads "over the river and through the wood to grandfather's house they go" for the Thanksgiving Day holiday -79m people are expected to travel this holiday. And that is evident in the announcement of three deals already. ABN Amro is in the market with a 3-pt offering of 4nc3 fixed and/or floating rate notes and 11nc10 senior non-preferreds, while Wells Fargo in its fourth trip to the US public debt market this year ($14.25bln) is looking to sell 11nc10 fixed-to-floating rate notes. Also on today’s docket is a $1000 par preferred offering from Citigroup which will mark its ninth visit to the market this year ($30.7bln).

As for market conditions this morning, looks are looking good. Futures are indicating a better than 300-point open for the Dow, while the S&P500 (0.5%) and the Nasdaq (0.54%) are also headed higher. This after the Dow rallied more than 400 points on Friday, and the S&P500 and Nasdaq eked out gains.

Evidently the markets applauded President-elect Trump’s nomination for Treasury Secretary, Key Square Group founder Scott Bessent. According to some, Investors view the pick favorably and see Bessent as someone who will be supportive of the equity market and who may help mitigate some of Trump’s most extreme protectionist policy proposals. It looks like the Treasury market has the same opinion, with yields falling over the weekend. The benchmark 10yr note is now yielding 4.32%, 9bp lower than Friday’s close, while the long bond yield also fell 9bp to 4.51%. The 2yr note yield didn’t fall quite as much, but is trading 6bp lower at 4.31%, while corporate spreads tightened 1bp to 80bp over comparable Treasuries.

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2024 HIGH GRADE ISSUANCE - 11/25 WEEK, NOVEMBER & 2024 ESTIMATES

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2024 HIGH GRADE ISSUANCE - 11/25 CALENDAR

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